TIDMAGTA
RNS Number : 1294I
Agriterra Ltd
31 March 2020
information communicated within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
31 March 2020
Agriterra Limited ('Agriterra' or the 'Company')
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
Audited Annual Results for Year Ended 31 March 2019
Agriterra Limited, the AIM-quoted African agricultural company,
announces its audited annual results for the year ended 31 March
2019 (the "2019 Annual Accounts").
As shareholders are aware, due to the delay in publishing the
2019 Annual Accounts, and consequently the Company's Interim
Accounts for the six months ended 30 September 2019 (the "2020
Interim Accounts"), dealings in the Company's ordinary shares have
been suspended from trading on AIM. The Company intends to release
the 2020 Interim Accounts later today, which will facilitate the
restoration to trading on AIM thereafter, and a further
announcement will be made in this regard.
The 2019 Annual Accounts are now available on the Company's
website and an extract of selected information from the 2019 Annual
Accounts is set out below. The 2019 Annual Accounts will be posted
to Shareholders today, with a Notice of Extraordinary General
Meeting to approve the 2019 Annual Accounts to follow shortly.
Please refer to the Chair's Statement for details on the
conclusions of the forensic investigation carried out by PKF
Littlejohn LLP into the identified minor thefts previously
announced.
**S **
For further information please visit www.agriterra-ltd.com or
contact:
Agriterra Limited Strand Hanson Limited
(Nominated & Financial Adviser and
Broker)
---------------------------- ------------------------------------
Caroline Havers James Spinney / Ritchie Balmer/ Rob
Patrick
caroline@agriterra-ltd.com +44 (0) 207 409 3494
Chair's statement and strategic review
I am pleased to present the annual report of the Group for the
year ending 31 March 2019 ('FY-19'). As shareholders are aware, the
Company's shares have been suspended from trading on AIM since 1
October 2019, pending further investigation into a theft uncovered
by management in June 2019. Further details are included below and
in note 27 to the financial statements.
During the year, the Group has focussed its efforts on its core
revenue generating businesses, the Grain and Beef divisions based
in Mozambique. The London office was closed in the final quarter of
the previous year ('FY-18') and the executive operational
management are now entirely based in Chimoio, Mozambique. This is
intended to provide a solid platform for future growth and
profitability.
During the year the Company elected to observe the principles of
the QCA Corporate Governance Code (the "Code") to the extent that
they consider them to be applicable and appropriate for a Group of
Agriterra's size and stage of development, through the maintenance
of efficient and effective management frameworks accompanied by
good communication. Further details are available at
http://www.agriterra-ltd.com/corporategovernance.aspx .
Strategy and Business Model
The Company's strategy is to operate efficient, profitable
businesses in Mozambique so as to create value for its shareholders
and other stakeholders by supplying beef and milled maize products
to the local market.
The Company currently has two operational agricultural
divisions:
-- Beef, which sources cattle from local farmers and then
processes them through its own feedlot, abattoir operations and
retail units through Mozbife Limitada ('Mozbife')
-- Grain, which operates maize purchasing and processing businesses through Desenvolvimento e Comercialização Agrìcola Limitada ('DECA') and Compagri Limitada ('Compagri').
These two divisions have built strong brands in Mozambique. The
Board intends to use these foundations to further grow and
diversify its product range in order to gain further market share
of the agricultural sector in Mozambique and explore export and
investment opportunities in surrounding countries.
Once the operations in Mozambique are profitable, the Company's
longer term strategy is to become a leading agri-operator and food
provider in Sub-Saharan Africa.
The Company is aware of its environmental, social and
governmental responsibilities and the need to maintain effective
working relationships across a range of stakeholder groups. The
major shareholder is represented on the Board ensuring their views
are incorporated into AGTA's decision-making process. The Company
also engages on a regular basis with the minority shareholders. In
addition to the Group's staff and shareholders, the local community
in Mozambique is a primary stakeholder. In purchasing maize and
cattle directly from the local community, the Group plays an
important role in local economic development, supporting small
scale farmers and the developing commercial sector. Further details
of some of the social and community initiatives undertaken during
the year are set out in the directors' report.
Operations review
Grain division
Following a good harvest, the first half of the year saw subdued
demand and pricing for the division's maize flour, reflecting the
relative abundance of maize in the informal sector. However steps
taken during the period to improve the yield and quality of maize
meal were well received in the market and, together with a
traditional seasonal increase in volumes in the second half of the
year, meal sales volumes for the year rose 2% to 16,791 tonnes
(FY-18: 16,472 tonnes). Sales of all maize products including
animal feed to Mozbife fell to 5,271 tonnes (FY-18: 6,663 tonnes).
Nonetheless a favourable pricing environment generated increased
revenue in Metical terms to MZN 391.5m (FY-18: MZN 323.1m) and in
US$ terms to US$ 6.5m (FY-18: US$ 5.2m).
During the period, a series of rationalisation measures were
also taken to realign the division's cost base with the lower
levels of demand. The benefits of these started to come through in
the second half of the period. The division is reporting an EBITDA
loss of US$ 485,000 (FY-18: loss of US$ 597,000). EBITDA has been
reconciled and defined in note 5.
Historically the cycle of maize purchases following the harvest
leads to a significant working capital requirement for the Grain
division in the first half of the year which unwinds in the second
half. The division finances this requirement using local borrowing
facilities. The interest charge for the year remains high at US$
916,000 (FY-18: US$ 951,000). The division is reporting a loss
after tax of US$ 1.8m (FY-18: US$ 1.7m). As the local maize market
develops, the division has successfully adjusted its purchasing
strategy to smooth out the peaks in demand for working capital.
This is reflected in lower inventory levels in comparison to
previous years. The steps taken to improve quality has allowed the
division to expand its product range. New distribution channels are
being developed with a view to increasing the brand's national
exposure and to enter the informal market during FY-20. These
measures are expected to improve margins and smooth the demand
cycle.
Beef division
The outbreak of foot and mouth in Mozambique in February 2018
severely curtailed the movement in cattle and limited the
division's ability to increase the pipeline of cattle in the
feedlot, and throughput to the abattoir. Although restrictions have
been removed in some areas, access to the main buying areas remains
limited. New sources of commercial cattle have been identified.
These cattle go straight to slaughter and help meet short term
changes in demand. Strict bio-security measures are in force at the
feedlot and the Dombe ranch and the operation has remained disease
free as at the year end and to date.
Following the recent announcement of the award of a grant from
Fundo Catalitico Para Inovacao E Demonstracao ("FCID") of US$
823,000, the division will be rolling out nine "centres of cattle
sales" in the Mozambique Province of Manica. This will help improve
the availability and quality of local cattle in future years. The
first of these is expected to be operational in the near
future.
The division is reporting meat sales for the year of 1,260
tonnes (FY-18: 1,453 tonnes). A change in pricing policy enabled
revenues to increase 7% in Metical terms to MTN 307m (FY-18: MTN
288m) and in US dollar terms to US$ 5.0m (FY-18: US$ 4.7m).
The measures taken to improve efficiencies of forage cropping
and the introduction of pelletised animal feed sourced from the
Grain division, has led to significantly improved performance in
the feedlot. Together with the full benefit from the
rationalisation of the division's ranching operations in the
previous year, the division reported a significant reduction in its
EBITDA loss to US$ 485,000 (FY-18: US$ 1,252,000). EBITDA has been
reconciled and defined in note 5. After a fall in the interest
charge to US$ 100,000 (FY-18: US$ 140,000), the division is
reporting a loss after tax of US$ 0.6m (FY-18: US$ 1.7m).
Key Performance Indicators
The Board monitors the Group's performance in delivery of
strategy by measuring progress against Key Performance Indicators
(KPIs). These KPIs comprise a number of operational, financial and
non-financial metrics.
2019 2018
Grain division
------------ ------------
- Average milling yield 76.2% 72.6%
------------ ------------
- Meal sold (tonnes) 16,791 16,472
------------ ------------
- EBITDA (note 5) (485,000) (597,000)
------------ ------------
- Net debt (3,670,000) (3,625,000)
------------ ------------
- Available headroom under banking
facilities 537,000 1,709,000
------------ ------------
Beef division
------------ ------------
- Slaughter herd size - number of head 2,468 3,956
------------ ------------
- Average daily weight gain in feedlot
(% of body mass) 0.32 0.25
------------ ------------
- Meat sold (tonnes) 1,260 1,453
------------ ------------
- EBITDA (note 5) (485,000) (1,252,000)
------------ ------------
- Net debt 663,000 180,000
------------ ------------
- Available headroom under banking
facilities 195,000 309,000
------------ ------------
Group
------------ ------------
- EPS (14.6) (31.1)
------------ ------------
- Liquidity - cash plus available headroom
under facilities 2,702,000 4,769,000
------------ ------------
These indicators have been budgeted for the first time for FY-20
and are used to monitor progress on a monthly basis. Further
strategic KPIs will be introduced once the immediate key goal of
moving the existing businesses into profitability has been
achieved.
Fraud Investigation
Following the report to the Auditors of the incidence of theft
which occurred on 17 June 2019, the Auditors requested a detailed
investigation of the circumstances. An initial management review
brought to light a further incident concerning a fictitious
purchase of grain in January 2019. Consequently, the Audit
Committee commissioned an external team of internal auditors to
conduct a detailed review of the procurement cycle. This review
brought to light a further incidence in December 2018, together
with a potential theft of petty cash which could not be accounted
for. The gross loss to the Group of all incidences was US$ 21,000
with a net loss of US$ 9,000. The Auditors questioned the
independence of the internal audit team and therefore could not
conclude that the frauds did not have a material impact on the
financial statements without the need for a forensic audit. The
Company commissioned PKF Littlejohn LLP to perform the forensic
audit, the scope of which was agreed with the Auditors. The
forensic audit concluded that there was no evidence that further
incidences of fraud had occurred and that there was no material
impact on the financial statements of those incidences which had
come to light. The additional costs incurred by the Auditors in
respect of the frauds were approximately US$55,000 and by the
forensic auditor approximately US$ 155,000.
Financial Review
Towards the end of FY-18, the corporate office in London was
closed and all senior operational management are now based in
Chimoio. Central costs have therefore fallen significantly to US$
0.5m (FY-18: US$ 1.6m). Together with the reduced loss at the Beef
division, the Group is reporting a reduction of 39% in the loss
after taxation of US$ 3.1m (FY-18 US$ 5.1m).
Net Debt at 31 March 2019 was US$ 2.4m (FY-18: US$ 0.7m).
Details of the Group's banking facilities are set out in note 19 to
the financial statements. Since the year-end, additional facilities
have been agreed, to enable the Grain division to invest in the
working capital required to secure sufficient grain to meet its
operational targets.
Risk management
The Company is subject to various risks and the future outlook
for the Group, and growth in shareholder value should be viewed
with an understanding of these risks. According to the risk, the
Board may decide to tolerate it, seek to mitigate it through
controls and operating procedures, or transfer it to third parties.
The following table shows the principal risks facing the Group and
the actions taken to mitigate these:
Key risk Detail How it is managed Change in the period
factor
Foreign Exchange The Group's operations The Group's borrowing No change. The Metical
are impacted by fluctuations facilities are denominated has been relatively
in exchange rates in Metical stable over the last
and the volatility couple of years as
of the Metical inflation falls and
interest rates come
down
-------------------------------- --------------------------------- ------------------------------
Political Changes to government Contingency plans to Increase with Presidential
instability policy and applicable protect assets and staff elections in October
laws could adversely should political or 2019
affect operations military tensions escalate
or the financial condition
of the Group
-------------------------------- --------------------------------- ------------------------------
Land ownership Property rights and Observance of any conditions No change
in Mozambique land are exclusive attaching to a DUAT
to the state. The
state grants rights
to use and develop
land "DUATs". The
operations are dependent
upon maintaining the
relevant DUATs
-------------------------------- --------------------------------- ------------------------------
Maize growing Adverse weather conditions, Diversify sources of No change. Operations
season national or regional supply and supply agreements were disrupted for
could impact on the a few days until regular
availability and pricing power was restored
of grain following Cyclone Idai
in March 2019. Only
superficial damage
to facilities occurred
and all personnel were
safe
-------------------------------- --------------------------------- ------------------------------
Cattle and Cattle are subject Stringent Bio-security Reduced - Improved
cattle feed to diseases and infections. measures are in place farming and silage
The availability and at the Farms and Feedlot. storage facilities.
price of feed impacts The division is now Some Foot and Mouth
profitability self-sufficient in roughage restrictions have been
crops and acquires a lifted
majority of its feed
from the Grain division
-------------------------------- --------------------------------- ------------------------------
Access to The Group is reliant During the year, the Reduced - the term
working capital on local banking facilities Group swapped a MTN loan reduces the exposure
in Mozambique 240m overdraft facility to reliance on the
into a 5 year amortizing renewal of short-term
term loan facilities
-------------------------------- --------------------------------- ------------------------------
Compliance There is a risk of The Board reinforces No change
a breach of the Group's an ethical corporate
business or ethical culture. Anti-bribery
conduct standards policies are in place,
and breach of anti-corruptions with regular training
laws, resulting in throughout the organisation
investigations, fines
and loss of reputation
-------------------------------- --------------------------------- ------------------------------
COVID-19 COVID-19 has had a Plans are being put The outbreak of COVID-19
significant negative in place to protect occurred post period
impact globally, both our staff and production end. The outbreak has
economically and socially. capabilities. The Group not yet spread significantly
There is a risk that remains alert to the to Mozambique with
there will be a significant fast changing environment only limited cases
outbreak of the COVID-19 and is prepared to put reported to date.
virus in Mozambique in place mitigating
which could potentially actions as events develop.
impact the population Our products, meal and
through contraction beef, are key staples
of COVID-19 and Government in the domestic Mozambican
enforced measures, market and demand is
and in turn impact not expected to be significantly
the Group's operations. affected should the
pandemic take hold.
The impact on future
liquidity has been discussed
further in the Going
Concern section below.
-------------------------------- --------------------------------- ------------------------------
The Board is also responsible for establishing and monitoring
the Group's systems of internal controls. Although no system of
internal control can provide absolute assurance against material
misstatement or loss, the Group's systems are designed to provide
the directors with reasonable assurance that problems are
identified on a timely basis and dealt with appropriately. The
Board reviews the effectiveness of the systems of internal control
and considers the major business risks and the control environment
on a regular basis. In light of this control environment the Board
considers that there is no current requirement for a permanent
separate internal audit function.
Going concern
The Group's business activities together with the factors likely
to affect its future performance are set out in this strategic
review. Note 21 to the financial statements refers to the Group's
objectives, policies and procedures for managing its capital, its
financial risk management objectives, its financial instruments and
exposures to credit, interest rate and liquidity risk.
As set out in note 19, the Group is funded by a combination of
short and long-term borrowing facilities. Subsequent to the
year-end, additional banking facilities have been agreed as set out
in note 26. The Group has received correspondence from the banks
providing overdraft facilities indicating that they do not
presently see any reason why the current overdraft facilities would
not be extended at their respective renewal dates (with certain
facilities becoming due for renewal in April and June 2020).
The Group has prepared forecasts for the Group's ongoing
businesses covering the period of at least 12 months from the date
of approval of these financial statements. These forecasts are
based on assumptions including, inter alia, that there are no
significant disruptions to the supply of maize or cattle to meet
its projected sales volumes and that key inputs are achieved, such
as forecast selling prices and volume, budgeted cost reductions,
and projected weight gains of cattle in the feedlot. They further
take into account working capital requirements and currently
available borrowing facilities. These forecasts show that the Group
is projected, in the short term, to continue to experience net cash
outflows rather than inflows. Based on a base case forecast
(inclusive of remedial action such as deferral of planned capital
expenditure and reduction in working capital balances), the Group
anticipates a shortfall in available cash against its pre-existing
facilities within the next 12 months and is contingent on securing
additional funding, either through additional loan and overdraft
facilities or through raising cash through capital transactions to
remain a going concern. The Group's key products, meal and beef are
important basic consumables in the domestic market in Mozambique
and the demand for which is expected to remain high should COVID-19
take hold in Mozambique. However, the impacts of COVID-19 are not
currently known and therefore a sensitised version of the Group's
forecasts have been prepared which both increases the shortfall
against pre-existing facilities and shortens the timing before a
shortfall arises.
The Group is in negotiations with a number of lenders regarding
additional funding to address the shortfall and to support the
growth that the business anticipates after the resolution of the
funding shortfall. Further details of the directors' considerations
are set out in note 3 to the financial statements.
The directors note that COVID-19 has had a significant negative
impact on the global economy, which may mean it is harder to secure
additional funding than it has historically been. Nonetheless,
based on the factors described above, whilst there are no
contractual guarantees, the directors are confident that the
existing financing will remain available to the Group and
additional sources of finance will be available. The directors,
with the operating initiatives already in place, are also confident
that the Group will achieve its cash flow forecasts. Therefore, the
directors have prepared the financial statements on a going concern
basis.
The forecasts show that the Group requires further funding to
meet its commitments as they fall due and in addition to this the
Group is reliant on maintaining its existing borrowings. If the
Group's forecasts are adversely impacted by COVID-19 or other
factors, then the Group may require further funding earlier than
expected. These conditions and events indicate the existence of
material uncertainties that may cast significant doubt upon the
Group's ability to continue as a going concern and the Group may
therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. These financial
statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
Outlook
The Group as a whole had a good start to FY-20. Sales to relief
agencies after Cyclone Idai, underpinned sales in the Grain
division in our traditionally quiet first quarter, however
inventory overhang in the market as a result of the aid programmes
slowed continued sales progress in the second quarter. The Beef
division has seen a fall in volumes as the South African Rand
depreciated to less than 4 Metical during Q1/early Q2 FY-20, which
lead to tough trading conditions in the south of the country where
our beef product has to compete with imports from South Africa.
Plans are being made and finance sought to develop a sustainable
presence in the Maputo market. This will provide a platform for
growth in the Beef division. Elections were held in October 2019
and led to variable demand in Q3 FY-20 for both divisions. The
outbreak of COVID-19 has not yet spread significantly to Mozambique
with only limited cases reported to date. Plans are being put in
place to protect our staff and production capabilities. Our
products, meal and beef, are key staples in the domestic Mozambican
market and although demand is not expected to be significantly
affected should the pandemic take hold, there are potential short
term risks which are disclosed further in the key risks section
above.
Board changes
On 28 December 2018 Mr. Daniel Cassiano-Silva stepped down from
his non-executive role. I would like to thank Dan for his valuable
contribution to the development of the Group during his previous
executive role as Group Finance Director.
The Board has been strengthened with the appointment of Mr. Neil
Clayton on 9(th) January 2019 and Ms. Amanda Thorburn on 1(st)
March 2019 as independent non-executive directors. Further
appointments will be made as the Group's requirements develop
including the appointment of a further independent non-executive
director, which the Company hopes to announce shortly. Details of
the directors and the committees they serve on are set out in the
Corporate Governance report.
CSO Havers,
Executive Chair
30 March 2020
Directors' report
Corporate Governance
The Company is quoted on AIM and from 28(th) September 2018 was
required to comply with the provisions of a recognised corporate
governance code. The board elected to adopt the Quoted Company
Alliance Corporate Governance Code (the "QCA code"). Further
details are available at
http://www.agriterra-ltd.com/corporategovernance.aspx .
The Board is committed to applying a standard of corporate
governance commensurate with its size and stage of growth and the
nature of its activities.
The Board
Following the investment by Magister Investments Limited in
September 2017, the board structure has been re-organised to ensure
it has the appropriate balance of skills and independence. The
Board currently comprises the Executive Chair, two non-independent
Non-Executive Directors and two independent Non-Executive Directors
who were appointed during the year. The Board is looking to further
enhance its composition, skills and balance as the company
develops. The Board currently comprises:
Caroline Havers, Executive Chair (AC; IC chair)
Ms. Havers is a highly experienced litigation/dispute resolution
lawyer having spent over 30 years within international law firms
working with clients operating in a variety of African
jurisdictions and industry sectors. During her legal career, Ms.
Havers has been both a partner and managing director of different
law firms. She provides advice on compliance and governance and is
a long qualified CEDR Mediator
Whilst the Group consolidates its operations in Mozambique, the
Board appointed Ms. Havers as Executive Chair. It is intending to
appoint a Chief Executive Officer, based in Mozambique in due
course.
Hamish Rudland, Non-Executive Director (IC)
Mr. Rudland has extensive experience across logistics,
agriculture, agro-processing, distribution and property. After
graduating from Massey University, New Zealand, he returned to
Zimbabwe in 1997 to start a passenger transport business that he
soon diversified into fuel tank haulage in the early 2000s.
Thereafter Mr. Rudland structured acquisitions of foreign-owned
asset rich companies to list on the Zimbabwe Stock Exchange. Mr.
Rudland has substantial investments in Zimbabwe Stock Exchange
listed companies which focus on his core competencies but also
synergise where advantages can be made.
As a result of Mr. Rudland's relationship to Magister
Investments Limited, he is not considered to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Gary Smith, Non-Executive Director (AC; RC)
Mr. Smith is an experienced finance professional and is
currently a non-executive director of several companies in Zimbabwe
and Mauritius. Mr. Smith worked in the UK for several years where
he was employed at Deutsche Bank, University of Surrey and Foxhills
Club & Resort. Upon returning to Africa he worked for a large
transport and logistics company in Mozambique for four years before
returning home to Zimbabwe and the above positions.
Mr. Smith is a Chartered Accountant and a resident and citizen
of Zimbabwe. As a result of Mr. Smith's relationship with Magister
Investments Limited, he is not considered to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Neil Clayton, Non-Executive Director (AC; RC Chair)
Mr. Clayton is a Chartered Accountant and has over 30 years of
experience in a variety of listed and un-listed companies.
Specifically, Mr. Clayton brings significant experience and
expertise as regards listed companies operating in Africa as well
as particular knowledge of the Company's business and requirements,
having held an interim finance role at the Company during 2018.
Despite his recent work with the Company the Board considers Mr.
Clayton to be an "independent" director for the purposes of the QCA
Corporate Governance Code.
Amanda Thorburn, Non-Executive Director (AC Chair; RC)
Ms. Thorburn is an associate chartered management accountant and
has 25 years' experience of working in Southern Africa across a
variety of financial and advisory roles focused on the telecoms and
agribusiness sectors. Ms. Thorburn has also established and run her
own baby linen manufacturing company. Since June 2011, she has
focused her attention on the agricultural sector, and has consulted
and advised on various aspects of many agriculture projects in the
region with a strong focus on value chain development in the
livestock sector.
The Board considers Ms. Thorburn to be an "independent" director
for the purposes of the QCA Corporate Governance Code.
The Executive Chair is expected to commit a minimum of 2 weeks
per month and the non-executive directors are expected to commit 2
days a month. In addition, all directors are expected to devote any
additional time that might be required in order to discharge their
duties.
Board meetings are held quarterly in Mozambique. The attendance
record of directors, since appointment, for the year is as
follows:
Meetings held Meetings attended
Caroline Havers 4 4
-------------- ------------------
Dan Cassiano-Silva (resigned 28
December 2018) 3 0
-------------- ------------------
Neil Clayton (appointed 9 January
2019) 1 1
-------------- ------------------
Hamish Rudland 4 4
-------------- ------------------
Gary Smith 4 4
-------------- ------------------
Amanda Thorburn (appointed 1 March
2019) 1 0
-------------- ------------------
The Board has entrusted the day-to-day responsibility for the
direction, supervision and management of the business to the Senior
Management Committee (the 'SMT'). The SMT is currently comprised of
the Executive Chair, the Operations Director and Chief Financial
Officer in Mozambique.
Certain matters are specifically reserved to the Board for its
decision including, inter alia, the creation or issue of new shares
and share options, acquisitions, investments and disposals,
material contractual arrangements outside the ordinary course of
business and the approval of all transactions with related
parties.
There is no agreed formal procedure for the directors to take
independent professional advice at the Group's expense. The
Company's directors submit themselves for re-election at the Annual
General Meeting at regular intervals in accordance with the
Company's Articles of Incorporation.
The Company has adopted a share dealing code for directors'
dealings which is appropriate for an AIM quoted company. The
directors and the Company comply with the relevant provisions of
the AIM Rules and the Market Abuse Regulation (EU) No. 596/2014
relating to share dealings and take all reasonable steps to ensure
compliance by the Group's employees.
Board committees
Due to the current size of the Board and the Company, there is
no separate Nominations Committee and any new directors are
appointed by the whole Board.
At the Board meeting held in March 2019 the new Audit ("AC"),
Investment ("IC") and Remuneration Committees ("RC") were
established. Terms of reference have been agreed subsequent to the
year end and full committee reports will be published in the next
annual report.
The Audit Committee is chaired by Amanda Thorburn and has been
actively engaged in the planning and conduct of the Audit of these
financial statements. The Committee has formally met twice since
the year end and the Chair has had independent conversations with
the Audit partners both in Mozambique and London where executive
management have not been present.
Terms and conditions for Directors
The Executive Chair and Non-Executive Directors do not have
service contracts but appointment letters setting out their terms
of appointment. The appointments may be terminated on three months'
notice by either party. The Non-Executive Directors receive an
annual base fee reflecting their respective time commitments and do
not receive any benefits in addition to their fees, nor are they
eligible to participate in any pension, bonus or share-based
incentive arrangements.
Directors' remuneration
Remuneration details are set out in note 9 to the financial
statements.
Evaluation of Board performance
As the Board has been reconstituted over the last 18 months, no
formal review of the effectiveness of its performance as a unit, as
well as that of its committees and the individual directors has
been taken. Given the Company's size, performance reviews are to be
carried out internally from time to time. Reviews will endeavour to
identify skills development or mentoring needs of directors and the
wider senior management team.
The Board recognises that the current procedures remain to be
formally implemented and therefore do not accord with the QCA
Guidelines. However it is anticipated that these procedures will be
augmented to a standard appropriate for the size and stage of
development of the Company.
Communication with shareholders
The Group aims to ensure all communications concerning the
Group's activities are clear, fair and accurate. The Board is
however keen to improve its dialogue with shareholders. The Group's
website is regularly updated and announcements are posted onto the
Company's website.
The results of voting on all resolutions in future general
meetings will be posted to the Company's website, including any
actions to be taken as a result of resolutions for which votes
against have been received from at least 20 per cent of independent
shareholders.
Directors' report
The directors the Company hereby present their annual report
together with the audited financial statements for the year ended
31 March 2019 for the Group. At the Annual General Meeting held on
30 November 2017, the shareholders approved a resolution to
consolidate 100 existing ordinary shares of 0.1p each ("Existing
Ordinary Share") into one new ordinary share of 10p each ("New
Ordinary Share"). All references to the number of shares in issue
at 31 March 2019 and in the comparative year relate to New Ordinary
Shares.
Except where otherwise noted, amounts are presented in this
Directors' report in United States Dollars ('$' or 'US$').
1. Listing details
Agriterra is a non-cellular Guernsey registered company limited
by shares, whose ordinary shares ('Ordinary Shares') are quoted on
the AIM Market of the London Stock Exchange ('AIM') under symbol
AGTA.
2. PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The principal activity of the Group is the investment in,
development of and operation of agricultural projects in Africa.
The Group's current operations are focussed on maize and beef in
Mozambique. A review of the Group's performance by business segment
and future prospects are given in the Chair's statement and
strategic review, together with a review of the risks and
uncertainties impacting on the Group's long-term performance.
3. Results and Dividends
The Group results for the year ending 31 March 2019 show a loss
after taxation of $3,095,000 (2018: loss $5,084,000). The Directors
do not recommend the payment of a final dividend (2018: $nil). No
interim dividends were paid in the year (2018: $nil).
Further details on the Group's performance in the year are
included in the Chair's statement and strategic review.
4. DIRECTORS
4.1. Directors in office
The Directors who held office during the year and until the date
of this report were:
Director Position
---------------------------------------- -----------------------
CSO Havers Executive Chair
DL Cassiano-Silva (resigned 28 December Non-Executive Director
2018)
NWH Clayton (appointed 9 January 2019) Non-Executive Director
HBW Rudland Non-Executive Director
GR Smith Non-Executive Director
A Thorburn (appointed 1 March 2019) Non-Executive Director
---------------------------------------- -----------------------
4.2. Directors' interests
As at the date of this report, the interests of the Directors
and their related entities in the Ordinary Shares of the Company
were:
Ordinary Shares
held
-------------- ----------------
HBW Rudland* 10,622,433
Mr. Rudland's interest is held through Magister Investments
Limited ('Magister'). Magister is a private limited company
incorporated in the Republic of Mauritius, wholly owned by
Mauritius International Trust Company Limited, as trustee of the
Casa Trust (a Mauritius registered trust). Mr. Hamish Rudland is
the Settlor of the Casa Trust and the beneficiaries of the Casa
Trust are Mr. Rudland, his wife, Mrs. Bridgette Rudland and their
three children (all of whom are under 18 years old).
4.3. Directors' emoluments
Details of the nature and amount of emoluments payable by the
Group for the services of its Directors during the financial year
are shown in note 9 to the financial statements.
Directors' share options
Details of the Director's interests in share options of the
Company during the financial year are as follows:
At
31 March Date from
2018 and Exercise which
Director 2019 price GBP Exercisable Expiry date
------------------- ---------- ----------- ------------- ------------
DL Cassiano-Silva 25,000 GBP1.47 (1) (2)
(1) These options were granted on 15 March 2014 and vest 20% per annum
on the first to fifth anniversary from the date of grant.
(2) These options expire five years after the date they vest.
These options lapsed on 28 June 2019.
4.4. Directors' indemnities
The Company has made qualifying third party indemnity provisions
for the benefit of its Directors which remain in force at the date
of this report.
5. Substantial Shareholdings
To the best of the knowledge of the Directors, except as set out
in the table below, there are no persons who, as of 30 March 2020,
are the direct or indirect beneficial owners of, or exercise
control or direction over 3% or more of the Ordinary Shares in
issue of the Company.
Number of Ordinary
Shares % Holding
------------------------------------- ------------------- ----------
Magister Investments Limited 10,622,433 50.01%
Gersec Trust Reg. 2,779,656 13.90%
Mr. William Philip Seymour Richards 982,500 4.63%
Global Resources Fund 678,886 3.20%
Peter Gyllenhammar AB 647,500 3.05%
6. EMPLOYEE INVOLVEMENT POLICIES
The Group places considerable value on the awareness and
involvement of its employees in the Group's performance. Within
bounds of commercial confidentiality, information is disseminated
to all levels of staff about matters that affect the progress of
the Group and that are of interest and concern to them as
employees.
7. SUPPLIER PAYMENT POLICY AND PRACTICE
The Group's policy is to ensure that, in the absence of dispute,
all suppliers are dealt with in accordance with its standard
payment policy which is to abide by the terms of payment agreed
with suppliers for each transaction. Suppliers are made aware of
the terms of payment. The number of days of average daily purchases
included in trade payables at 31 March 2019 was 20 days (2018: 4
days).
8. POLITICAL AND CHARITABLE DONATIONS
During the year no political and charitable donations were made
(2018: $nil).
9. SOCIAL AND COMMUNITY ISSUES
The mission of the Group in Mozambique is to work with and
support the local producers by creating an efficient route to
market of a top quality national product. We strongly believe in
the "field to fork" process and will continue to develop this
concept as the group of companies grow. We have recently created a
slogan called "Do campo para mesa" meaning "From the field to the
table" which simply cements our beliefs in the business. We respect
that it is part of our wider responsibility to promote the
development of the countries in which we operate. Central to this
development and continued economic growth is employment and
training. Wherever possible, the Group continues to ensure that its
expertise and specialist skills and facilities are made available
to the broader community.
Particular activities undertaken during the year have focused on
(1) practical, 'on the ground' training for students from various
universities in Mozambique studying, inter alia, production
practices in beef and cattle, milling practices (including mill
engineering), veterinary sciences and animal sciences; (2)
dissemination of agricultural management knowledge and practices;
and (3) provision of health and medical assistance.
Milling
With respect to educational activities, this year DECA hosted
two 6 month post-graduation internship for students in HR and IT
technology in the Administration department. Then we recruited 2
post graduate students in Finance who are currently under an
internship and if successful will be taken on permanently in the
finance department as cost accountants. We have also hosted one
position for 3 months in the Technical department in the milling
section in food technology. Our Manager in Tete has recently
graduated in business and economics and continues to run our
facility in Tete as the senior Manager in charge.
Beef
The Mozbife Vanduzi feedlot hosted 38 animal and veterinary
science students and 17 students in the Abattoir throughout the
year for practical aspects of their university courses. We have
recently employed a post graduate food technologist in the Abattoir
to support the quality control system. We recently trained 60
employees in the Abattoir and butcheries on meat processing and
quality control practices to ensure our product is always of a high
standard. Mozbife is currently working to become Global Gap
accredited from the farm to the feedlot in ensuring traceability
and quality standard of products at all times.
With respect to the promotion of health and medical assistance,
DECA recently donated its ambulance to Dr Abrantes' clinic in
Chimoio which is the first port of call for the operations in case
of any emergency. He also coordinates and monitors progress on mid
to long term treatments ensuring employees are supported through
whatever treatments are required. We have undertaken further work
on the clinic in the district of Dombe to provide a service base
for this very rural community.
Community relations initiatives have recently received a major
boost this year in that Mozbife was awarded a US$ 823,000 grant
from the Catalytic fund to construct 9 community buying points in
the various areas we operate in. These cattle buying centres (or
known as CBC's) will formalize the buying process by having state
of the art equipment and infrastructure in place to support the
activities. This investment has also brought about the creation of
9 associations who have all been registered and have received
training in functioning as an association. The CBC will certainly
go a long way in cementing our support within these communities. We
envisage bolting on other activities like maize buying and the
selling of the finished goods of which they supply into. At
Vanduzi, manure from the feedlot is given to surrounding small
scale farming associations, being out growers for Companhia de
Vanduzi and Westfalia who commercially export fruit and vegetables
to the European market. Both DECA and Mozbife sponsored the annual
Christmas party for three orphanages with over 200 children in
Msika district, and meal was distributed to certain communities
during the planting season to ensure local seed stocks were
planted.
10. Independent Auditor and STATEMENT of provision of
INFORMATION TO the independent AUDITOR
BDO LLP have expressed their willingness to continue in office
as independent auditor of the Company and a resolution to
re-appoint them will be proposed at the forthcoming Annual General
Meeting.
The Directors who held office at the date of approval of this
Directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is not aware and each Director has taken all the steps that
he ought to have taken as a Director to make himself aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
11. ADDITIONAL INFORMATION AND ELECTRONIC COMMUNICATIONS
Additional information on the Company can be found on the
Company's website at www.agriterra-ltd.com .
The maintenance and integrity of the Company's website is the
responsibility of the Directors; the work carried out by the
auditor does not involve consideration of these matters and
accordingly, the auditor accepts no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
The Company's website is maintained in compliance with AIM Rule
26.
By Order of the Board.
CSO Havers
Executive Chair
30 March 2020
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law, 2008, as amended (the '2008 Law')
requires the Directors to prepare group financial statements for
each financial year in accordance with generally accepted
accounting principles.
The Directors are required by the AIM Rules of the London Stock
Exchange to prepare group financial statements in accordance with
International Financial Reporting Standards ('IFRS') as adopted by
the European Union ('EU').
The financial statements of the Group are required by law to
give a true and fair view and are required by IFRS as adopted by
the EU to present fairly the financial position and financial
performance of the Group.
In preparing the Group financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements are properly prepared
in accordance with the Companies (Guernsey) Law, 2008. They are
also responsible for safeguarding the assets of the Group and
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website. Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
The Directors confirm they have discharged their
responsibilities as noted above.
Independent auditor's report to the members of Agriterra
Limited
Opinion
We have audited the financial statements of Agriterra Limited
("the Parent Company") and its subsidiaries (the 'Group') for the
year ended 31 March 2019 which comprises the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated cash flow
statement and notes to the consolidated financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2019 and of the Group's loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 3 to the financial statements
concerning the Group's ability to continue as a going concern which
shows that the Group will need to renew its overdraft facilities
and maintain its current borrowings and raise further finance in
order to continue as a going concern. As disclosed in note 3, the
Group's overdraft facilities require renewal within the going
concern period. In addition to this the Group have noted further
uncertainty created by the COVID-19 pandemic which could impact the
ability to raise further financing.
The matters explained in note 3 indicate that material
uncertainties exist that may cast significant doubt on the Group's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group was
unable to continue as a going concern. Our opinion is not modified
in respect of this matter.
Given the conditions and uncertainties noted above, we
considered going concern to be a Key audit matter. Our audit
procedures in response to this key audit matter included the
following:
- We reviewed the recent renewal of the overdraft facility and
obtained representations from the Board that there has been no
correspondence from the bank in respect of the breach of covenants
in respect of the term loan.
- We requested and have obtained, assurance from the banks that
overdraft facilities are likely to be extended beyond the current
expiry date.
- We critically assessed management's financial forecast over
their period of going concern assessment to March 2021. This
included consideration of the key underlying assumptions and
involved reviewing actual performance against budget.
- We have undertaken sensitivity analysis on management's
forecasts based on the achieved run rate in FY-20.
- We discussed these matters with management and the Audit
Committee and obtained representations from the Board in respect of
the future plans of the Group.
- We reviewed the Group's assessment of the impact of COVID-19
using our knowledge of the business and the industry that the Group
operates in.
- We evaluated the adequacy of disclosures made in the financial
statements. We found that the disclosure of this matter was
adequately described.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
In addition to the key audit matter on going concern above we
note the following key audit matters:
Impairment assessment of the Beef and Grain divisions
As detailed in note 14, the Group's principal non-current assets
relate to the Beef and Grain divisions. Management must assess at
each reporting date whether there is any objective evidence of
impairment of the Group's assets. Management noted that indicators
of impairment exist, such as the losses incurred during the year.
Management undertook impairment tests using the value in use (VIU)
method to determine if, as at 31 March 2019, the recoverable amount
of each of the divisions was greater than its carrying value. This
assessment involved significant management judgement and estimates,
as detailed in the significant accounting policies and estimates
note and note 4. We therefore considered the impairment assessment
and the appropriateness of the estimates and disclosures to be a
key audit matter.
How we addressed the matter. We evaluated management's value in
use impairment models for the Grain and Beef divisions and
critically challenged the key estimates and assumptions used by
management by comparing forecast revenue and costs to historic
actual performance, comparing inflation and discount rate
assumptions to third party independent sources and confirming that
the forecasts were formally reviewed and approved by the Board and
were consistent with operational budgets. We performed sensitivity
analysis over individual key inputs, together with a combination of
sensitivities over such inputs including pricing, sales volumes and
operation costs and assessed the level of cash under such
sensitivities. We reviewed the disclosures in the financial
statements, particularly the disclosures of key estimates and
assumptions which impact the fair values, and the sensitivity
analysis thereon.
Key Observations: We found management's assessment of the
carrying value of the Beef and Grain divisions to be acceptable and
appropriately disclosed.
Valuation of Biological assets
As detailed in note 16, as at 31 March 2019 the Group holds
$830,000 of biological assets (2018: $1,137,000) which are
principally comprised of livestock in the Beef division. The
valuation of these assets requires management estimation to derive
the fair value of livestock assets in accordance with IAS 41
'Biological Assets'. Management have determined the valuation of
these assets with reference to input assumptions including the
average price of cattle purchased (per KG) in the period preceding
year-end, the size of the livestock herd as at 31 March 2019, the
daily growth rate of cattle (and the impact on the herd value over
time) and the expected costs to sell.This valuation involved
significant management judgement and estimates, as detailed in the
significant accounting policies and estimates note and note 4. We
therefore considered the impairment assessment and the
appropriateness of the estimates and disclosures to be a key audit
matter.
How we addressed the matter. We evaluated management's fair
value model for the valuation of livestock and critically
challenged the key estimates and assumptions used by management
being selling prices, foreign exchange rates and costs to bring
them to market. In doing so, corroborated the estimates to actual
selling prices, market data and actual costs respectively. We also
confirmed that inputs were appropriate under relevant accounting
standards and were derived from information materially consistent
with the financial statements and third party independent sources.
We reviewed the disclosures in the financial statements,
particularly the disclosures of key estimates and assumptions.
Key Observations: We found management's assessment of the
valuation of Biological assets to be acceptable and appropriately
disclosed.
Fraud
As disclosed in note 27, fraudulent payments totalling $21,000
were discovered by Management. There was a risk that further frauds
were not detected. A forensic investigation was undertaken by an
independent expert which did not identify any further frauds.
How we addressed the matter. We involved forensic specialists
from BDO who reviewed management's assessments of the identified
frauds and reviewed management's assessment and conclusion that no
further frauds had occurred. As disclosed in note 27, we determined
that a forensic investigation undertaken by an independent expert
was required. We considered whether we could rely on the work of
the independent expert who carried out the forensic investigation.
Our consideration involved making an assessment of the expert's
competence, capabilities and their independence. At the planning
stage of their work we reviewed their scope, and we also reviewed
their final report and conclusions. Throughout our review of the
forensic investigation, we involved forensic specialists from
BDO.
Key Observations: We found the scope of the forensic
investigation to be appropriate, and the frauds to be appropriately
disclosed.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Group materiality was determined to be $160,000 (2018 -
$200,000). The basis for determining materiality was 1.5% of total
assets. Total assets was selected as the basis for determining
materiality because the business is loss-making, cash consumptive
and recently raised significant financing and therefore it was
concluded that the most relevant metric to users of the financial
statements was an asset-based measure, reflecting stakeholders'
desire to understand the closing asset position and liquidity of
the Group.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. Performance materiality was
set at $120,000 (2018 - $100,000) for the Group. The basis for
performance materiality was 75% (2018 - 50%) of the above
materiality levels. We selected the level of performance
materiality based on an assessment of the history of errors and the
number of significant components.
Each significant component of the Group was audited to a lower
level of materiality ranging from $52,500 to $105,000 (2018 -
$76,000 to $110,000).
We agreed with the Audit Committee that we would report to the
Committee all individual audit differences identified during the
course of our audit in excess of $3,500. We also agreed to report
differences below these thresholds that, in our view warranted
reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements at the Group level. Our Group audit scope
focused on the Group's principal operating businesses being the
Grain and Beef divisions, which were subject to a full scope audit
for Group reporting purposes by BDO Mozambique. Together with the
parent company and its Group consolidation, which was also subject
to a full scope audit by BDO LLP, these represent the significant
components of the Group.
The remaining components of the Group were considered
non-significant holding companies and these components were
principally subject to analytical review procedures. 100% of the
Group's revenue and 100% of the Group's total assets were subject
to full audit procedures. The audits of each of the components were
principally performed in the United Kingdom and Mozambique. All of
the audits were conducted by BDO LLP and BDO Mozambique. As part of
our audit strategy, the senior members of the BDO LLP audit team
visited each of the principal operating locations in the year in
addition to holding frequent calls and meetings with the BDO
Mozambique component team.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report and consolidated financial statements,other than the
financial statements and our auditor's report thereon. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the Parent Company; or
-- the Parent financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and explanations
which, to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors'
responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a
body, in accordance with Section 262 of the Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might
state to the Parent Company's members those matters we are required
to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Jack Draycott
Audit Director
For and on behalf of BDO LLP, Statutory Auditor
30 March 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127)
Consolidated income statement
For the year ended 31 March 2019
Year Year
ended ended
31 March 31 March
2019 2018
Note US$000 US$000
--------- ---------
Continuing operations
Revenue 5 10,629 9,222
Cost of sales (9,891) (8,184)
Increase in fair value of biological assets 478 510
--------- ---------
Gross profit 1,216 1,548
Operating expenses (3,860) (5,619)
Other income 225 25
Profit on disposal of property, plant and equipment 340 88
Operating loss 6 (2,079) (3,958)
Finance costs 10 (1,016) (1,084)
Loss before taxation (3,095) (5,042)
Taxation 11 - (4)
--------- ---------
Loss for the year from continuing operations (3,095) (5,046)
Discontinued operations
Loss for the year from discontinued operations 12 - (38)
Loss for the year attributable to owners of the
Company (3,095) (5,084)
US cents US cents
--------- ---------
LOSS PER SHARE
Basic and diluted loss per share from continuing
operations 13 (14.6) (30.9)
--------- ---------
Basic and diluted loss per share from continuing
and discontinued operations 13 (14.6) (31.1)
--------- ---------
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
For the year ended 31 March 2019
Year Year
ended ended
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Loss for the year (3,095) (5,084)
--------- ---------
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences (133) 764
--------- ---------
Other comprehensive (loss)/income for the year (133) 764
--------- ---------
Total comprehensive loss for the year attributable
to owners of the Company (3,228) (4,320)
--------- ---------
Consolidated statement of financial position
As at 31 March 2019
31 March 31 March
2019 2018
Note US$000 US$000
---------- ----------
Non-current assets
Property, plant and equipment 14 6,292 6,315
Intangible assets 15 166 -
6,458 6,315
---------- ----------
Current assets
Biological assets 16 830 1,137
Inventories 17 675 938
Trade and other receivables 18 698 1,096
Assets classified as held for sale - 19
Cash and cash equivalents 2,197 3,541
---------- ----------
4,400 6,731
---------- ----------
Total assets 10,858 13,046
---------- ----------
Current liabilities
Borrowings 19 1,708 4,235
Trade and other payables 20 1,186 469
2,894 4,704
---------- ----------
Net current assets 1,506 2,027
---------- ----------
Non-current liabilities
Borrowings 19 2,850 -
----------
2,850 -
---------- ----------
Total liabilities 5,744 4,704
---------- ----------
Net assets 5,114 8,342
---------- ----------
Share capital 22 3,373 3,373
Share premium 151,442 151,442
Share based payment reserve 172 1,988
Translation reserve (16,870) (16,737)
Accumulated losses (133,003) (131,724)
Equity attributable to equity holders of the
parent 5,114 8,342
---------- ----------
The financial statements on pages 15 to 40 were approved and
authorised for issue by the Board of Directors on 30 March
2020.
Signed on behalf of the Board of Directors by:
CSO Havers
Chair
30 March 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2019
Share
based
Share Share payment Translation Accumulated Total
capital premium reserve reserve losses Equity
Note US$000 US$000 US$000 US$000 US$000 US$000
--------- --------- --------- ------------ ------------ --------
Balance at 1 April
2017 1,960 148,622 1,985 (17,501) (126,640) 8,426
Loss for the year - - - - (5,084) (5,084)
Other comprehensive
income:
Exchange translation gain
on foreign operations - - - 764 - 764
--------- --------- --------- ------------ ------------ --------
Total comprehensive loss
for the year - - - 764 (5,084) (4,320)
Transactions with
owners
Issue of shares net
of expenses 1,413 2,820 - - - 4,233
Share based payments 23 - - 3 - - 3
Total transactions with owners
for the year 1,413 2,820 3 - - 4,236
Balance at 31 March
2018 3,373 151,442 1,988 (16,737) (131,724) 8,342
Loss for the year - - - - (3,095) (3,095)
Other comprehensive
income:
Exchange translation loss
on foreign operations - - - (133) - (133)
Total comprehensive loss
for the year - - - (133) (3,095) (3,228)
Transactions with
owners
Share based payments 23 - - (1,816) - 1,816 -
--------- --------- --------- ------------ ------------ --------
Total transactions with owners
for the year - - (1,816) - 1,816 -
Balance at 31 March
2019 3,373 151,442 172 (16,870) (133,003) 5,114
--------- --------- --------- ------------ ------------ --------
Consolidated cash flow statement
For the year ended 31 March 2019
Year ended Year ended
31 March 31 March
2019 2018
Note US$000 US$000
------------- -------------
Cash flows from operating activities
Loss before tax from continuing operations (3,095) (5,042)
Adjustments for:
Amortisation and depreciation 14/15 620 490
Profit on disposal of property, plant and equipment (340) (87)
Share based payment expense 23 - 3
Foreign exchange loss/(gain) 80 (181)
Net decrease in biological assets 16 754 194
Increase in value of biological assets 16 (478) (510)
Finance costs 10 1,016 1,097
Investment revenues - (13)
Impairment of current and non-current assets - 4
Operating cash flows before movements in working
capital (1,443) (4,045)
Decrease in inventories 238 481
Decrease in trade and other receivables 392 772
Increase/(decrease) in trade and other payables 744 (297)
Cash used in operating activities by continuing
operations (69) (3,089)
Corporation tax paid - (4)
Interest received - 13
Net cash used in operating activities by continuing
operations (69) (3,080)
------------- -------------
Net cash used in operating activities by discontinued
operations - (38)
------------- -------------
Net cash used in operating activities (69) (3,118)
------------- -------------
Cash flows from investing activities
Proceeds from disposal of subsidiary, net of
costs and cash balances disposed of - 476
Proceeds from disposal of property, plant and
equipment, net of expenses incurred 346 232
Acquisition of property, plant and equipment 14 (920) (116)
Acquisition of intangible assets 15 (193) -
Net cash (used in)/generated from investing
activities (767) 592
------------- -------------
Cash flows from financing activities
Issue of shares, net of expenses incurred - 4,233
Net (repayment)/draw down of overdrafts 19 (3,258) 1,506
Net draw down/(repayment) of loans 19 3,773 (1,035)
Finance costs (1,016) (1,097)
Net cash (used in)/generated from financing
activities (501) 3,607
------------- -------------
Net (decrease)/increase in cash and cash equivalents (1,337) 1,081
Effect of exchange rates on cash and cash equivalents (7) 35
------------- -------------
Cash and cash equivalents at beginning of the
year 3,541 2,425
------------- -------------
Cash and cash equivalents at end of the year 2,197 3,541
------------- -------------
Notes to the consolidated financial statements
1. GeNERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel
Islands, with registered number 42643. Further details, including
the address of the registered office, are given on page 41. The
nature of the Group's operations and its principal activities are
set out in the Directors' report. A list of the investments in
subsidiaries and associate companies held directly and indirectly
by the Company during the year and at the year-end, including the
name, country of incorporation, operation and ownership interest is
given in note 3.
The reporting currency for the Group is the US Dollar ('$' or
'US$') as it most appropriately reflects the Group's business
activities in the agricultural sector in Africa and therefore the
Group's financial position and financial performance.
The financial statements have been prepared in accordance with
IFRSs as adopted by the EU.
2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
2.1 In the current year, the Group has adopted all new and
revised IFRSs that are relevant to its operations and effective for
annual reporting periods beginning on or after 1 January 2018. At
the date of authorisation of these financial statements for the
year ended 31 March 2019, the following IFRSs were adopted:
2.1.1 IFRS 9 Financial Instruments
IFRS 9 has replaced IAS 39 Financial Instruments:
-- Recognition and measurement: Financial assets are classified
by reference to the business model within which they are held and
their contractual cash flow characteristics. IFRS 9 introduces a
'fair value through other comprehensive income' category for
certain debt instruments. Financial liabilities are classified in a
similar manner to under IAS 39, however there are differences in
the requirements applying to the measurement of an entity's own
credit risk.
-- Impairment: IFRS 9 introduces an 'expected credit loss' model
for the measurement of the impairment of financial assets, so it is
no longer necessary for a credit event to have occurred before a
credit loss is recognised.
-- Hedge accounting: Introduces a new hedge accounting model
that is designed to be more closely aligned with how entities
undertake risk management activities when hedging financial and
non-financial risk exposures. The Group does not hedge account for
these accounts.
-- Derecognition: The requirements for derecognition of
financial assets and liabilities are carried forward from IAS 39.
Following an assessment of the classification of each financial
asset no changes to classification were required. Management have
performed an assessment of expected credit losses for the Group
receivables (note 18).
The Group applied the modified retrospective transition
method.
2.1.2 IFRS 15 Revenue from Contracts with Customers
IFRS 15 provides a single, principles based five-step model to
be applied to all contracts with customers.
The five steps in the model are as follows:
-- Identify the contract with the customer
-- Identify the performance obligations in the contract
-- Determine the transaction price
-- Allocate the transaction price to the performance obligations in the contracts
-- Recognise revenue when (or as) the entity satisfies a performance obligation.
Guidance is provided on topics such as the point in which
revenue is recognised, accounting for variable consideration, costs
of fulfilling and obtaining a contract and various related matters.
New disclosures about revenue are also introduced.
Management has assessed the core principle of IFRS 15, that the
Company will recognise revenue to depict the transfer of promised
goods to customers in an amount that reflects the consideration to
which the Company expects to be entitled in exchange for the goods.
Group revenue comprises the sale of processed agricultural produce
in the retail and wholesale markets. Revenue is recognised when
goods are collected or delivered to the customer in line with
published or contracted terms and conditions. The Company has
reviewed the terms and conditions of the Company and is satisfied
that there is no change to the timing of revenue recognition under
IFRS 15.
2.2 The Group has not applied the following new, revised or
amended pronouncements that have been issued by the IASB as they
are not yet effective for the annual financial year beginning 1
April 2018.
2.2.1 IFRS 16 Leases
IFRS 16 specifies how an IFRS reporter will recognise, measure,
present and disclose leases. The standard provides a single lessee
accounting model, requiring lessees to recognise assets and
liabilities for all leases unless the lease term is 12 months or
less or the underlying asset has a low value. Lessors continue to
classify leases as operating or finance, with IFRS 16's approach to
lessor accounting substantially unchanged from its predecessor, IAS
17.
The mandatory implementation required by the standard is for
years beginning on or after 1 January 2019. This change in
accounting policy will be implemented for the first time for the
financial year ending 31 March 2020 with the relevant analysis
completed for the interim results to 30 September 2019.
The directors do not expect there to be a material impact to the
financial statements from the adoption of this standard.
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared on a historical cost
basis, except for certain financial instruments, biological assets
and share based payments. Historical cost is generally based on the
fair value of the consideration given in exchange for the assets
acquired. The principal accounting policies adopted are set out
below in this note.
Going concern
The Group has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities.
These forecasts show that the Group is projected, in the short
term, to continue to experience net cash outflows rather than
inflows. As disclosed in the Chair's statement, based on a base
case forecast (inclusive of remedial action such as deferral of
planned capital expenditure and reduction in working capital
balances), the Group anticipates a shortfall in available cash
against its pre-existing facilities within the next 12 months and
is contingent on securing additional funding either through
additional loan and overdraft facilities or through raising cash
through capital transactions to remain a going concern.
The Group's focus remains on continuing to improve operational
performance of the Grain and Beef divisions with emphasis on volume
and pricing growth to increase gross margins.
Grain division: Plans show volumes of 32,000 tonnes in the year
ending 31 March 2021 ("FY-21"), (Year ended 31 March 2019: 16,791
tonnes) supported by new customer orders resulting from the new
product ranges and improved quality of product as set out in the
Strategic Report. In September 2019, the division secured
additional overdraft financing facilities ($ 0.9m). In addition,
the division is planning to introduce further new consumer product
lines. These initiatives and increased volume will require
additional investment in capital expenditure and working capital
and additional banking facilities are being sought to support this
growth.
Beef division: The FY-21 forecast shows significant revenue
growth against FY-19 with projected monthly revenues averaging $
0.51m (FY-19: $ 0.42m). The forecast is supported by the
initiatives put in place during FY-19 and FY-20. In particular it
is planned to build an increased presence in the Maputo region over
the coming year.
COVID-19: The Group is developing plans to deal with COVID-19.
The key focus will be on maintaining the health of our workforce.
Intercontinental travel by senior management has been suspended and
the regional travel policy will respond to regional advice as it
evolves. The Group's key products, meal and beef are important
basic consumables in the domestic market in Mozambique, demand for
which is expected to remain high should COVID-19 take hold in
Mozambique. The Group therefore does not anticipate any planned
closures of sites or cessation of revenues. However, the impacts of
COVID-19 are not currently known and therefore a sensitised version
of the Group's forecasts have been prepared which both increases
the shortfall against pre-existing facilities and shortens the
timing before a shortfall arises.
Corporate overheads are forecast to be consistent with the
current run rate. Certain one-off expenditure to address the
matters described in note 26 were incurred during FY-20.
The divisional forecasts for FY-21 show a significant
improvement in operating performance as compared to that reported
for the year ended 31 March 2019 (and those achieved in the year
ending 31 March 2020). However, there can be no certainty that the
turnaround plans will be successful, and the forecasts are
sensitive to small adverse changes in the operations of the
divisions. The forecasts show that the Group will require
additional funding in the going concern period to meet the
anticipated growth. Our sensitised forecasts, in which remedial
action is taking which restricts growth in favour of short-term
cash benefit, also forecasts the need for further funding in the
going concern period. Discussions are ongoing with the banks to
arrange additional facilities and the Group is evaluating further
disposals of non-core assets.
As set out in notes 19 and 26, the Group is funded by a
combination of short and long-term borrowing facilities. $ 2.3m of
overdraft facilities are due for renewal within the next 12 months
and the Group is required to make $ 0.8m of repayments in respect
of the bank loan principal amount together with principal on
finance leases of $ 0.1m.
To date the Group has continued to make all repayments of
interest and principal on the term loan. The Group has also
received correspondence from the banks providing overdraft
facilities indicating that they do not presently see any reason why
the current overdraft facilities would not be extended at their
respective renewal dates (with certain facilities becoming due for
renewal in April 2020). Consequently, the forecasts include all
contractual interest and capital repayments and assume that both
the term loan and overdraft facilities will continue to be
available and will be renewed for a further year when they are
reviewed in 2020.
Based on the above, whilst there are no contractual guarantees,
the directors are confident that the existing financing will remain
available to the Group and additional sources of finance will be
available. The directors, with the operating initiatives already in
place and funding options available are confident that the Group
will achieve its cash flow forecasts. Therefore, the directors have
prepared the financial statements on a going concern basis.
The forecasts show that the Group requires further funding to
meet its commitments as they fall due and in addition to this the
Group is reliant on maintaining its existing borrowings. If the
Group's forecasts are adversely impacted by COVID 19 or other
factors then the Group may require further funding earlier than
expected. COVID-19 has had a significant negative impact on the
global economy which may mean it is harder to secure additional
funding than it has historically been. These conditions and events
indicate the existence of material uncertainties that may cast
significant doubt upon the Group's ability to continue as a going
concern and the Group may therefore be unable to realise their
assets and discharge their liabilities in the ordinary course of
business. These financial statements do not include the adjustments
that would result if the Group were unable to continue as a going
concern.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 March 2019. The company controls
an investee if all three of the following elements are present:
power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to
affect those variable returns. Control is reassessed whenever facts
and circumstances indicate that there may be a change in any of
these elements of control.
Intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
As at 31 March 2019, the Company held equity interests in the
following undertakings:
Direct investments
Proportion Country of incorporation
held of and place of
equity instruments business Nature of business
Subsidiary undertakings
Agriterra (Mozambique)
Limited 100% Guernsey Holding company
Indirect investments of Agriterra (Mozambique) Limited
Proportion
held of Country of incorporation
equity and place of
instruments business Nature of business
Subsidiary undertakings
DECA - Desenvolvimento
E Comercialização
Agrícola Limitada 100% Mozambique Grain
Compagri Limitada 100% Mozambique Grain
Mozbife Limitada 100% Mozambique Beef
Carnes de Manica Limitada 100% Mozambique Beef
Aviação Agriterra
Limitada 100% Mozambique Dormant
Foreign currency
The individual financial statements of each company in the Group
are prepared in the currency of the primary economic environment in
which it operates (its 'functional currency'). The consolidated
financial statements are presented in US Dollars.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the date of the transaction. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not
retranslated.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's operations are translated
at exchange rates prevailing at the balance sheet date. Income and
expense items are translated at the average exchange rates for each
month, unless exchange rates fluctuate significantly during the
month, in which case exchange rates at the date of transactions are
used. Exchange differences arising from the translation of the net
investment in foreign operations and overseas branches are
recognised in other comprehensive income and accumulated in equity
in the translation reserve. Such translation differences are
recognised as income or expense in the year in which the operation
or branch is disposed of.
The following are the material exchange rates applied by the
Group:
Average Rate Closing Rate
2019 2018 2019 2018
------- ------ ------- ------
Mozambican Metical: US$ 60.82 61.15 63.73 61.31
------- ------ ------- ------
Operating segments
The Chief Operating Decision Maker is the Board. The Board
reviews the Group's internal reporting in order to assess
performance of the business. Management has determined the
operating segments based on the reports reviewed by the Board which
consider the activities by nature of business.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable for goods and services provided in the
normal course of business, net of discounts, value added taxes and
other sales related taxes.
Performance obligations and timing of revenue recognition:
All of the Group's revenue is derived from selling goods with
revenue recognised at a point in time when control of the goods has
transferred to the customer. This is generally when the goods are
collected or delivered to the customer. There is limited judgement
needed in identifying the point control passes: once physical
delivery of the products to the agreed location has occurred, the
Group no longer has physical possession, usually it will have a
present right to payment. Consideration is received in accordance
with agreed terms of sale.
Determining the contract price:
All of the Group's revenue is derived from fixed price lists and
therefore the amount of revenue to be earned from each transaction
is determined by reference to those fixed prices.
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product
sold. Therefore, there is no judgement involved in allocating the
price to each unit ordered.
There are no long-term contracts in place. Sales commissions are
expensed as incurred. No practical expedients are used.
Operating loss
Operating loss is stated before investment revenues, other gains
and losses, finance costs and taxation.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial year of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. The Group did not incur any borrowing costs
in respect of qualifying assets in any year presented.
All other borrowing costs are recognised in profit or loss in
the year in which they are incurred.
Share based payments
The Company issues equity-settled share based payments to
certain employees of the Group. These payments are measured at fair
value (excluding the effect of non-market based vesting conditions)
at the date of grant and the value is expensed on a straight-line
basis over the vesting year, based on the Group's estimate of the
shares that will eventually vest and adjusted for non-market based
vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Employee benefits
Short-term employee benefits
Short-term employee benefits include salaries and wages,
short-term compensated absences and bonus payments. The Group
recognises a liability and corresponding expense for short-term
employee benefits when an employee has rendered services that
entitle him/her to the benefit.
Post-employment benefits
The Group does not contribute to any retirement plan for its
employees. Social security payments to state schemes are charged to
profit and loss as the employee's services are rendered.
Leases
Leases that transfer substantially all the risks and rewards of
ownership are classified as finance leases. During the years
presented in these financial statements, the Group was counterparty
to certain operating lease contracts. Rentals payable under
operating leases are charged to profit and loss on a straight-line
basis over the term of the relevant lease.
Taxation
The Company is resident for taxation purposes in Guernsey and
its income is subject to income tax, presently at a rate of zero
per cent per annum. The income of overseas subsidiaries is subject
to tax at the prevailing rate in each jurisdiction.
The income tax expense for the year comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity, when tax is recognised
in other comprehensive income or directly in equity as appropriate.
Taxable profit differs from accounting profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
Current tax expense is the expected tax payable on the taxable
income for the year. It is calculated on the basis of the tax laws
and rates enacted or substantively enacted at the balance sheet
date and includes any adjustment to tax payable in respect of
previous years. Deferred tax is calculated using the balance sheet
liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised to the extent that it is probable that
taxable profit will be available against which the asset can be
utilised. This requires judgements to be made in respect of the
availability of future taxable income.
The Group's deferred tax assets and liabilities are calculated
using tax rates that are expected to apply in the year when the
liability is settled or the asset realised based on tax rates that
have been enacted or substantively enacted by the reporting
date.
Deferred income tax assets and liabilities are offset only when
there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax
assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances
on a net basis.
No deferred tax asset or liability is recognised in respect of
temporary differences associated with investments in subsidiaries,
branches and joint ventures where the Group is able to control the
timing of reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable
future.
Property, plant and equipment
All items of property, plant and equipment are stated at
historical cost less accumulated depreciation (see below) and
impairment. Historical cost includes expenditure that is directly
attributable to the acquisition. Subsequent costs are included in
the asset's carrying value when it is considered probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably.
Depreciation is charged on a straight-line basis over the
estimated useful lives of each item, as follows:
Land and buildings:
Land Nil
Buildings and leasehold improvements 2% - 33%
Plant and machinery 5% - 25%
Motor vehicles 20% - 25%
Other assets 10% - 33%
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Gains and
losses on disposals are determined by comparing proceeds received
with the carrying amount of the asset immediately prior to disposal
and are included in profit and loss.
Impairment of property, plant and equipment
At each balance sheet date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit and loss because the Group does not record any assets at a
revalued amount.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit and
loss.
Biological assets
Consumer biological assets, being the beef cattle herd, are
measured in accordance with IAS 41, 'Agriculture' at fair value
less costs to sell, with gains and losses in the measurement to
fair value recorded in profit and loss. Breeding cattle, comprising
bulls, cows and heifers are expected to be held for more than one
year, and are classified as non-current assets. The non-breeding
cattle comprise animals that will be grown and sold for slaughter
and are classified as current assets.
Cattle are recorded as assets at the year-end and the fair value
is determined by the size of the herd and market prices at the
reporting date.
Cattle ceases to be a biological asset from the point it is
slaughtered, after which it is accounted for in accordance with the
accounting policy below for inventories.
Forage crops are valued in accordance with IAS 41, 'Agriculture'
at fair value less costs to harvest. As there is no ready local
market for forage crops, fair value is calculated by reference to
the production costs of previous crops. The cost of forage is
charged to profit or loss over the year it is consumed.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses. The cost of inventories is based on the
weighted average principle and includes expenditure incurred in
acquiring the inventories and bringing them to their existing
location and condition.
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at
amortised cost, at fair value through other comprehensive income
("FVTOCI") or at fair value through profit or loss ("FVPL")
depending upon the business model for managing the financial assets
and the nature of the contractual cash flow characteristics of the
financial asset.
A loss allowance for expected credit losses is determined for
all financial assets, other than those at FVPL, at the end of each
reporting period. The Group applies a simplified approach to
measure the credit loss allowance for trade receivables using the
lifetime expected credit loss provision. The lifetime expected
credit loss is evaluated for each trade receivable taking into
account payment history, payments made subsequent to year-end and
prior to reporting, past default experience and the impact of any
other relevant and current observable data. The Group applies a
general approach on all other receivables classified as financial
assets. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk
since initial recognition.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. The Group
derecognises financial liabilities when the Group's obligations are
discharged, cancelled or have expired.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade
receivables do not carry any interest and are stated at their
nominal value as reduced by appropriate expected credit loss
allowances for estimated recoverable amounts as the interest that
would be recognised from discounting future cash payments over the
short payment period is not considered to be material. Other
receivables are accounted for at amortised cost and are stated at
their nominal value as reduced by appropriate expected credit loss
allowances.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group's financial
liabilities approximate to their fair values.
The Group's financial liabilities consist of financial
liabilities measured at amortised cost and financial liabilities at
fair value through profit or loss.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
statement of comprehensive income.
Borrowings
Borrowings are included as financial liabilities on the Group
balance sheet at the amounts drawn on the particular facilities net
of the unamortised cost of financing. Interest payable on those
facilities is expensed as finance cost in the period to which it
relates.
Trade and other payables
Trade and other payables are initially recorded at fair value
and subsequently carried at amortised cost.
Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability or, in
the absence of a principal market, in the most advantageous market
for the asset or liability. The principal or the most advantageous
market must be accessible to the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
For all other financial instruments not traded in an active
market, the fair value is determined by using valuation techniques
deemed to be appropriate in the circumstances. Valuation techniques
include the market approach (i.e. using recent arm's length market
transactions adjusted as necessary and reference to the current
market value of another instrument that is substantially the same)
and the income approach (i.e. discounted cash flow analysis and
option pricing models making as much use of available and
supportable market data as possible).
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing the categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting year.
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies which are
described in note 3, the directors are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. The effect on
the financial statements of changes in estimates in future years
could be material.
Impairment
Impairment reviews for non-current assets are carried out at
each balance sheet date in accordance with IAS 36, Impairment of
Assets. Reported losses in the Beef and Grain divisions were
considered to be indications of impairment and a formal impairment
review was undertaken.
The impairment reviews are sensitive to various assumptions,
including the expected sales forecasts, cost assumptions, capital
requirements, and discount rates among others. The forecasts of
future cash flows were derived from the operational plans in place
to address the requirement to increase both volumes and margins
across the two divisions. Real commodity prices were assumed to
remain constant at current levels.
Discount rate: Current central bank prime MIMO benchmark rate is
15% and with inflation at around 3.5%, the benchmark real interest
rate is around 11.5%. The real rate assumed in these forecasts is
12.5%, consistent with prior years. Current nominal bank borrowing
rates are 19%, but these are expected to fall further as the
economy returns to growth and inflation remains stable. The Beef
division is not sensitive to an increase in the discount rate to
15.5%.
Grain division: The forecasts for the Grain division show a
return towards the 10 year moving average with meal sales
increasing to 27,000 tonnes in FY-20 (Year ending 31 March 2019:
16,791). A shortfall in the projected volumes of 10% or a reduction
in the gross margin of more than 20% would lead to an indication of
impairment.
Beef division : The forecasts for the Beef division show volumes
of all meat products improving to 1,600 tonnes in FY-20 (Year
ending 31 March 2019: 1,260 tonnes) and to 1,800 tonnes in FY-21. A
fall in forecasted sales volumes of 3% or a reduction in budgeted
gross margin of 3% would be required to trigger the need for a
further impairment. The assets of the Beef division were impaired
by $ 3.1m in the year ended 31 May 2016 following the decision to
destock the ranches. The Board continues to evaluate the
development of these assets, however it is too early to consider
whether or not the previous impairment charge should be
reversed.
No impairments were recorded in the year ended 31 March 2019 or
the year ended 31 March 2018.
Biological assets
Cattle are accounted for as biological assets and measured at
their fair value at each balance sheet date. Fair value is based on
the estimated market value for cattle in Mozambique of a similar
age and breed, less the estimated costs to bring them to market,
converted to US$ at the exchange rate prevailing at the year end.
Changes in any estimates could lead to the recognition of
significant fair value changes in the consolidated income
statement, or significant changes in the foreign currency
translation reserve for changes in the Metical to US$ exchange
rate.
The herd may be categorised as either the breeding herd or
slaughter herd, depending on whether it was principally held for
reproduction or slaughter. At 31 March 2019 the value of the
breeding herd disclosed as a non-current asset was $nil (31 March
2018: $nil). The value of the herd held for slaughter disclosed as
a current asset was $ 0.8m (31 March 2018: $ 1.1m).
The Group has increased its capacity to produce sufficient
forage to meet its requirements in the feedlot. Accordingly forage
crops have been valued at 31 March 2019 at $ 5,000 (31 March 2018:
$ 28,000).
Recoverability of input Value Added Tax
Mozambique Value Added Tax ('IVA') operates in a similar manner
to UK Value Added Tax ('VAT'). The Group is exempt from IVA on its
sales of maize products under the terms of Mozambique tax law. The
Group is able to recover input sales tax on substantially all of
the purchases of the Grain division. The Group is always therefore
in a net recovery position of IVA in respect of its Grain
operations. To date the Group has not succeeded in recovering IVA
from the Mozambique Government. Due to the significant uncertainty
over the recoverability of these IVA balances, the Group has
provided in full against the assets as at 31 March 2018 and 31
March 2019. As at 31 March 2019, the gross and net IVA recoverable
assets are respectively $ 1,046,000 (31 March 2018: $1,057,000) and
$nil (31 March 2018: $nil) at the US$ to Metical exchange rate of
63.73 (31 March 2018: 61.31) at that date.
5. Segment reporting
The Board considers that the Group's operating activities
comprise the segments of Grain and Beef and which are undertaken in
Africa. In addition, the Group has certain other unallocated
expenditure, assets and liabilities, either located in Africa or
held as support for the Africa operations.
Segment revenue and results
The following is an analysis of the Group's revenue and results
by operating segment:
Year ending 31 March 2019 Grain Beef Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000
-------- ------- ------------- -------------- --------
Revenue
External sales(2) 5,586 5,043 - - 10,629
Inter-segment sales(1) 873 - - (873) -
-------- ------- ------------- -------------- --------
6,459 5,043 - (873) 10,629
-------- ------- ------------- -------------- --------
Segment results
- Operating loss (1,168) (973) (503) - (2,644)
- Interest expense (916) (100) - - (1,016)
- Other gains and losses 309 252 4 - 565
-------- ------- ------------- -------------- --------
Loss before tax (1,775) (821) (499) - (3,095)
-------- ------- ------------- -------------- --------
Income tax - - - - -
-------- ------- ------------- -------------- --------
Loss after tax (1,775) (821) (499) - (3,095)
-------- ------- ------------- -------------- --------
Year ending 31 March Grain Beef Cocoa(3) Unallo-cated Discon- Elimina-tions Total
2018 tinued(4)
US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------- -------- --------- ------------- ----------- -------------- --------
Revenue
External sales(2) 4,519 4,703 - - - - 9,222
Inter-segment
sales(1) 680 - - - - (680) -
-------- -------- --------- ------------- ----------- -------------- --------
5,199 4,703 - - - (680) 9,222
-------- -------- --------- ------------- ----------- -------------- --------
Segment results
- Operating (loss)
/ profit (747) (1,588) (31) (1,630) 38 - (3,958)
- Interest (expense)
/ income (951) (140) - 7 - - (1,084)
(Loss) / profit
before
tax (1,698) (1,728) (31) (1623) 38 - (5,042)
-------- -------- --------- ------------- ----------- -------------- --------
Income tax (2) (2) - - - - (4)
-------- -------- --------- ------------- ----------- -------------- --------
(Loss) / profit for
the year after tax (1,700) (1,730) (31) (1,623) 38 - (5,046)
-------- -------- --------- ------------- ----------- -------------- --------
Inter-segment sales are charged at prevailing market prices.
(1)
Revenue represents sales to external customers and is recorded
(2) in the country of domicile of the Group company making the
sale. Sales from the Grain and Beef divisions are principally
for supply to the Mozambique market.
Expenses incurred prior to the disposal of the Cocoa division.
(3)
Amounts reclassified to discontinued operations - refer
(4) to note 12.
The segment items included in the consolidated income statement
for the year are as follows:
Year ending 31 March 2019 Grain Beef Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000
------- ------- ------------- -------------- -------
Depreciation and amortisation 374 236 10 - 620
------- ------- ------------- -------------- -------
Year ending 31 Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
March 2018
US$000 US$000 US$000 US$000 US$000 US$000 US$000
------- ------- ------- ------------- -------------- -------------- -------
Depreciation 152 338 - - - - 490
------- ------- ------- ------------- -------------- -------------- -------
Segment assets, liabilities and capital expenditure
Segment assets consist primarily of property, plant and
equipment, biological assets, inventories, trade and other
receivables and cash and cash equivalents. Segment liabilities
comprise operating liabilities, including an overdraft financing
facility in the Grain segment, and bank loans and overdraft
financing facilities in the Beef segment.
Capital expenditure comprises additions to property, plant and
equipment.
The segment assets and liabilities at 31 March 2019 and capital
expenditure for the year then ended are as follows:
Grain Beef Unallocated Total
US$000 US$000 US$000 US$000
-------- ------- ------------ --------
Assets 3,964 4,885 2,009 10,858
Liabilities (4,742) (861) (141) (5,744)
Capital expenditure 355 727 31 1,113
-------- ------- ------------ --------
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
US$000 US$000
------- ------------
Segment assets and liabilities 8,849 (5,603)
Unallocated:
Intangible asset 21 -
Other receivables 16 -
Cash and cash equivalents 1,972 -
Accrued liabilities - (141)
10,858 (5,744)
------- ------------
The segment assets and liabilities at 31 March 2018 and capital
expenditure for the year then ended are as follows:
Grain Beef Cocoa Unallocated Total
US$000 US$000 US$000 US$000 US$000
-------- ------- ------- ------------ --------
Assets 4,984 4,918 - 3,144 13,046
Liabilities (3,981) (528) - (195) (4,704)
Capital expenditure 9 107 - - 116
-------- ------- ------- ------------ --------
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
US$000 US$000
------- ------------
Segment assets and liabilities 9,902 (4,509)
Unallocated:
Other receivables 22 -
Cash and cash equivalents 3,122 -
Trade payables - (72)
Accrued liabilities - (123)
13,046 (4,704)
------- ------------
Key performance Indicator
The Board considers that earnings before interest, tax,
depreciation and amortisation ("EBITDA") is a key performance
indicator in measuring operational performance. It is calculated as
follows:
Year ending 31 March 2019 Grain Beef Unallo-cated Total
US$000 US$000 US$000 US$000
-------- ------- ------------- --------
Loss before tax (1,775) (821) (499) (3,095)
- Interest expense 916 100 - 1,016
- Depreciation and amortisation charge 374 236 10 620
-------- ------- ------------- --------
EBITDA (485) (485) (489) (1,459)
-------- ------- ------------- --------
Year ending 31 March 2018 Grain Beef Cocoa(3) Unallo-cated Discon- Total
tinued(4)
US$000 US$000 US$000 US$000 US$000 US$000
-------- -------- --------- ------------- ----------- --------
Loss before tax (1,700) (1,730) (31) (1,623) 38 (5,046)
- Interest expense 951 140 - (7) - 1,084
- Depreciation and amortisation
charge 152 338 - - - 490
-------- -------- --------- ------------- ----------- --------
EBITDA (597) (1,252) (31) (1,630) 38 (3,472)
-------- -------- --------- ------------- ----------- --------
Significant customers
In the year ended 31 March 2019, 2 customers of the Grain
segment generated revenue of $ 2.3m amounting to 11.4% of Group
revenue for one customer and 10.6% for the other. One customer of
the Beef segment generated revenue of $ 1.3m amounting to 12.5% of
Group revenue (Year ended 31 March 2018: one customer of the Grain
division generated revenue of $ 1,2m amounting to 12.5% of Group
revenue).
6. Operating loss
Operating loss has been arrived at after charging /
(crediting):
Year Year
ended ended
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Depreciation of property, plant and equipment
(see note 14) 600 490
Amortisation of intangible asset (see note
15) 20 -
Profit on disposal of property, plant and equipment (340) (87)
Net foreign exchange gain (11) (162)
Impairment of investment in associate - 4
Staff costs (see note 8) 1,971 2,095
--------- ---------
7. Auditors Remuneration
Amounts payable to the auditors and their associates in respect
of audit services are as follows:
Year Year
Ended ended
31 March 31 March
2019 2018
US$000 US$000
-------- --------
Fees payable to the Company's auditor for
the audit of the Company's accounts 130 56
Fees payable to the Company's auditor for
the forensic audit of the Company's subsidiaries 55
Fees payable to the Company's auditor and
their associates for other services to the
Group:
- The audit of the Company's subsidiaries 79 26
-------- --------
Total audit fees 264 82
-------- --------
Other than as disclosed above, the Company's auditor and their
associates have not provided additional services to the Group.
8. Staff costs
The average monthly number of employees (including executive
Directors) employed by the Group for the year was as follows:
Year Year
ended ended
31 March 31 March
2019 2018
Number Number
--------- ---------
Office and Management 60 72
Operational 497 536
--------- ---------
557 608
--------- ---------
Their aggregate remuneration comprised:
Year Year
ended ended
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Wages and salaries 1,904 2,036
Social security costs 67 56
Share based payment charge - 3
--------- ---------
1,971 2,095
--------- ---------
9. REMUNERATION OF DIRECTORS
Share
based
Year ended 31 March 2019 Salary Bonus payment Total
US$000 US$000 US$000 US$000
--------- -------- --------- --------
CS Havers 41 - - 41
DL Cassiano-Silva - - - -
NWH Clayton 2 - - 2
HWB Rudland 10 - - 10
GR Smith 10 - - 10
A Thorburn 1 - - 1
64 - - 64
--------- -------- --------- --------
Share
based
Year ended 31 March 2018 Salary Bonus payment Total
US$000 US$000 US$000 US$000
--------- -------- --------- --------
CS Havers 46 - - 46
DL Cassiano-Silva 136 82 2 220
AS Groves 65 49 - 114
HWB Rudland 5 - - 5
B Scott 68 - - 68
GR Smith 5 - - 5
325 131 2 458
--------- -------- --------- --------
10. Finance costs
Year Year
Ended ended
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Interest receivable on bank deposits - 13
Interest expense on bank borrowings and overdrafts (1,016) (1,097)
--------- ---------
Net finance costs (1,016) (1,084)
--------- ---------
11. Taxation
Year Year
Ended ended
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Loss before tax from continuing activities (3,095) (5,042)
--------- ---------
Tax credit at the Mozambican corporation tax
rate of 32% (2018: 32%) (990) (1,613)
Tax effect of expenses that are not deductible
in determining taxable profit 107 18
Tax effect of (income not taxable) or losses
not allowable 125 (66)
Tax effect of net losses not recognised in
overseas subsidiaries (net of effect of different
rates) 758 1,661
Statutory taxation payments irrespective of
income - 4
Tax expense - 4
--------- ---------
The tax reconciliation has been prepared using a 32% tax rate,
the corporate income tax rate in Mozambique, as this is where the
Group's principal assets of its continuing operations are
located.
The Group has not recognised any tax credits for the year ended
31 March 2019 (2018: $nil). The Group has operations in overseas
jurisdictions where it has incurred taxable losses which may be
available for offset against future taxable profits amounting to
approximately $ 11,386,000 (2018: $ 14,168,000). In addition, the
Group has further deductible timing differences relating to
property, plant and equipment, and foreign exchange gains and
losses on intercompany loans, amounting to approximately $
25,660,000 (2018: $ 28,876,000). No deferred tax asset has been
recognised for these tax losses and other deductible timing
differences as the requirements of IAS 12, 'Income taxes', have not
been met.
The Company is resident for taxation purposes in Guernsey and
its income is subject to Guernsey income tax, presently at a rate
of zero percent per annum (2018: zero percent per annum). No tax is
payable for the year. Deferred tax has not been provided for, as
brought forward tax losses are not recoverable under the Income Tax
(Zero 10) (Guernsey) Law, 2007 (as amended).
12. Discontinued operations
The loss after tax arising on discontinued operations during the
year is analysed by business operation as follows:
Year Year
ended ended
31 March 31 March
2019 2018
US$000 US$000
---------- ---------
Cocoa activities - (8)
Group rationalisation - (30)
Net loss after tax attributable to discontinued
operations
(attributable to owners of the Company) - (38)
----------- ---------
The Cocoa division's operating companies were sold on 1 June
2017.
13. LOSS per share
The calculation of the basic and diluted loss Year ended Year ended
per share is based on the following data:
31 March 31 March
2019 2018
US$000 US$000
----------- -----------
Loss for the year for the purposes of basic
and diluted earnings per share from continuing
activities (3,095) (5,046)
Loss for the year for the purposes of basic
and diluted earnings per share from discontinued
activities - (38)
----------- -----------
Loss for the year for the purposes of basic
and diluted earnings per share attributable
to equity holders of the Company (3,095) (5,084)
----------- -----------
Weighted average number of Ordinary Shares
for the purposes of basic and diluted loss
per share 21,240,618 16,351,388
----------- -----------
Basic and diluted loss per share - US cents (14.6) (31.1)
----------- -----------
Basic and diluted loss per share from continuing
activities - US cents (14.6) (30.9)
----------- -----------
Basic and diluted loss per share from discontinued
activities - US cents - (0.2)
----------- -----------
At the Annual General Meeting held on 30 November 2017, the
shareholders approved a resolution to consolidate 100 existing
ordinary shares of 0.1p each ("Existing Ordinary Share") into one
new ordinary share of 10p each ("New Ordinary Share"). The weighted
average number of ordinary shares used for the purposes of
calculating loss per share for the year ending 31 March 2019 and
year ending 31 March 2018 refer to New Ordinary Shares.
The Company has issued options over ordinary shares which could
potentially dilute basic loss per share in the future. There is no
difference between basic loss per share and diluted loss per share
as the potential ordinary shares are anti-dilutive.
14. Property, plant and equipment
Land and Plant Motor Other
buildings and machinery vehicles Assets Total
US$000 US$000 US$000 US$000 US$000
Cost
At 1 April 2017 12,952 3,944 1,779 306 18,981
Additions 12 95 1 8 116
Disposals - (17) (168) (15) (200)
Disposal of subsidiary (5,950) - - - (5,950)
Exchange rate adjustment 645 340 244 26 1,255
-------------------------- --------------- ---------- -------- --------
At 31 March 2018 7,659 4,362 1,856 325 14,202
Additions 67 685 131 37 920
Disposals (35) (134) (90) (106) (365)
Reclassification 41 (41) - - -
Exchange rate adjustment (338) (189) (73) (9) (609)
At 31 March 2019 7,394 4,683 1,824 247 14,148
-------------------------- --------------- ---------- -------- --------
Accumulated depreciation
and impairment
At 1 April 2017 8,995 1,999 1,706 187 12,887
Charge for the year 124 260 78 28 490
Disposals - (2) (162) (15) (179)
Disposal of subsidiary (5,950) - - - (5,950)
Exchange rate adjustment 157 266 200 16 639
-------------------------- --------------- ---------- -------- --------
At 31 March 2018 3,326 2,523 1,822 216 7,887
Charge for the year (5) 852 (323) 76 600
Disposals (35) (134) (89) (53) (311)
Reclassification 41 (41) - - -
Exchange rate adjustment (138) (120) (54) (8) (320)
At 31 March 2019 3,189 3,080 1,356 231 7,856
-------------------------- --------------- ---------- -------- --------
Net book value
31 March 2019 4,205 1,603 468 16 6,292
-------------------------- --------------- ---------- -------- --------
31 March 2018 4,333 1,839 34 109 6,315
-------------------------- --------------- ---------- -------- --------
For the year ended 31 March 2019, a depreciation charge of $
600,000 (2018: $ 490,000) has been included in the consolidated
income statement within operating expenses and $ nil (2018: $ nil)
has been included within discontinued operations.
Property, plant and equipment with a carrying amount of $
4,719,000 (2018: $ 4,674,000) have been pledged to secure the
Group's bank overdrafts and loans (note 19). The Group is not
allowed to pledge these assets as security for other borrowings or
sell them to another entity.
15. Intangible Assets
US$000
Cost
At 31 March 2018 -
Additions 193
Exchange rate adjustment (7)
At 31 March 2019 186
-------
Accumulated amortisation
At 31 March 2018 -
Charge for the year 20
Exchange rate adjustment -
At 31 March 2019 20
-------
Net book value
31 March 2019 166
-------
31 March 2018 -
-------
Intangible assets comprise investment in management information
and financial software.
At 31 March 2019 and 31 March 2018, the Group had no contractual
commitments for the acquisition of property, plant and
equipment.
16. Biological assets
US$000
--------
Fair value
At 1 April 2017 746
Purchase of biological assets 2,913
Sale, slaughter or other disposal of biological
assets (3,107)
Change in fair value of the herd 510
Foreign exchange adjustment 75
At 31 March 2018 1,137
Purchase of biological assets 1,608
Sale, slaughter or other disposal of biological
assets (2,362)
Change in fair value of the herd 478
Foreign exchange adjustment (31)
--------
At 31 March 2019 830
--------
At 31 March 2019 and 2018, all cattle are held for slaughter.
The slaughter herd has been classified as a current asset. Forage
crops included in current assets are US$ 5,000 (2018: US$
28,000).
At 31 March 2019 the slaughter herd comprised 2,468 head (2018:
3,956), with an average weight of 270kgs (2018: 260 kgs) and
average value of US$ 335 (2018: US$ 281).
For valuation purposes, cattle that are not in the feedlot are
grouped into classes of animal (e.g. bulls, cows, steers etc.) and
a standard animal weight per breed and class was then multiplied by
the number of animals in each class to determine the estimated
total live weight of all animals in the herd. For animals in the
feedlot, their weight has been estimated based on their individual
weigh in data at the closest weigh in date to the year end. Cattle
are generally kept for periods less than 3 months before
slaughter.
The Group's slaughter herd have been pledged in full to secure
the Beef division's bank overdraft and loans (see note 19).
17. Inventories
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Consumables and spares 297 304
Raw materials 48 301
Work in progress - 4
Finished goods 330 329
675 938
--------- ---------
During the year inventories amounting to US$ 7,690,000 (2018:
US$ 7,077,000) were included in cost of sales.
Inventories with a carrying amount of $ 331,000 (2018: $
452,000) have been pledged to secure the Grain division's bank
overdraft and inventories with a carrying value of $ 168,000 (2018:
$ 166,000) having been pledged to secure the Beef division's bank
overdraft and loans (see note 19).
18. Trade and other receivables
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Trade receivables 542 1,048
Other receivables 138 11
Prepayments 18 37
698 1,096
--------- ---------
Trade receivables
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Trade receivables - gross 865 1,087
Loss allowance (323) (39)
--------- ---------
542 1,048
--------- ---------
Trade receivables are amounts due from customers for goods sold
in the ordinary course of business. They are generally due for
settlement within 30 days and therefore are all classified as
current. Trade receivables are recognised initially at the amount
of consideration that is unconditional. The Group holds the trade
receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost
using the effective interest method.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on the days past
due.
At 31 March 2019 Current More than More than More than Total
30 days 60 Days 90 days
US$000 US$000 US$000 US$000 US$000
-------- ---------- ---------- ---------- -------
Expected loss rate 0% 0% 0% 97% 37%
-------- ---------- ---------- ---------- -------
Gross trade receivables 384 124 25 332 865
-------- ---------- ---------- ---------- -------
Loss allowance - - - 323 323
-------- ---------- ---------- ---------- -------
At 31 March 2018 Current More than More than More than Total
30 days 60 Days 90 days
US$000 US$000 US$000 US$000 US$000
-------- ---------- ---------- ---------- -------
Expected loss rate 0% 0% 0% 48% 4%
-------- ---------- ---------- ---------- -------
Gross trade receivables 669 319 18 81 1,087
-------- ---------- ---------- ---------- -------
Loss allowance - - - 39 39
-------- ---------- ---------- ---------- -------
The closing loss allowances for trade receivables as at 31 March
2019 reconcile to the opening loss allowances as follows:
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Loss allowances at 1 April previously calculated
under IAS 39 39 36
Increase in loan loss allowance recognised in
profit or loss during the year 297 8
Receivables written off during the year as uncollectible - (8)
Exchange rate adjustment (13) 3
Loss allowances at 31 March 323 39
--------- ---------
Trade receivables are provided for when there is no reasonable
expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a
debtor to engage in a repayment plan with the Group, and a failure
to make contractual payments for a period of greater than 120 days
past due. This is used as the basis of the ECL provision disclosed
above. The Group determines the percentage based on historic
trends. Impairment losses on trade receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line
item.
In the prior year, the impairment of trade receivables was
assessed based on the incurred loss model. Individual receivables
which were known to be uncollectable were written off by reducing
the carrying amount directly. The other receivables were assessed
collectively to determine whether there was objective evidence that
an impairment had been incurred but not yet been identified. For
these receivables the estimated impairment losses were recognised
in a separate provision for impairment. Receivables for which an
impairment provision was recognised were written off against the
provision when there was no expectation of recovering additional
cash.
Trade receivables with a carrying amount of $ 134,000 (2018: $
799,000) have been pledged to secure the Grain division's bank
overdraft and trade receivables with a carrying value of $ 324,000
(2018: $ 249,000) have been pledged to secure the Beef division's
bank overdraft and loans (see note 19).
Further details on the Group's financial assets are provided in
note 21.
19. Borrowings
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Non-current liabilities
Bank loans 2,510 -
Finance leases 340 -
--------- ---------
2,850 -
--------- ---------
Current liabilities
Bank loans 753 50
Finance leases 48 -
Overdraft 907 4,185
--------- ---------
1,708 4,235
--------- ---------
4,558 4,235
--------- ---------
Beef division
On 27 April 2017, the Group agreed revised lending facilities
with Standard Bank to finance the Beef division in Mozambique. The
existing term loans were consolidated into one loan repayable in
twelve monthly instalments commencing May 2017. At 31 March 2018,
the remaining balance was $ 0.05m. This was settled in May
2018.
On 18 February 2019, the Group entered into a finance lease for
MTN 27.6m ($ 0.43m) repayable over 5 years, secured on certain
agricultural equipment.
The Beef division has an overdraft facility of 30 million
Metical ($ 0.47m). The amount drawn down at 31 March 2019 was $
0.32m (2018: $ 0.34m).
On 25 May 2019, the overdraft facility has been renewed for a
further 12 months and carries an interest rate at the Bank's prime
lending rate (19.5%) at 31 March 2019.
The facilities are secured as follows: 31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Fixed Charge
Property, plant and equipment 2,913 1,913
Floating Charge
Cattle 825 1,109
Meat Inventories 168 166
Trade receivables 324 249
--------- ---------
4,230 3,437
--------- ---------
Grain division
On 27 April 2017, the Group formally completed the renewal of
the Grain division's 300 million Metical overdraft facility to
provide working capital funding, principally for the purchase of
maize and related operating expenditure. The amount drawn down at
31 March 2018 was $ 3.84m.
On 25 May 2018 the facility was restructured into a 240 million
Metical ($ 3.77m) 5 year term loan with an interest rate of the
Bank's prime lending rate +0.25% and a 12 month 60 million Metical
($ 0.94m) overdraft facility at the Bank's prime lending rate less
1.75%. At 31 March 2019, the principal outstanding on the term loan
was 208 million Metical ($ 3.26m) and the amount drawn on the
overdraft facility was 37.2 million Metical ($ 0.58m). On 25(th)
May 2019, the overdraft facility was renewed for a further 12
months.
The facilities are secured as follows:
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Fixed Charge
Property, plant and equipment 1,806 2,761
Floating Charge
Maize and maize product inventories 331 452
Trade receivables 134 799
--------- ---------
2,271 4,012
--------- ---------
As further security to the bank loans and overdrafts, Agriterra
Limited has issued a Corporate guarantee in favour of the bank.
Under the terms of the guarantee, it may only be called upon once
the bank has exhausted all possible means of recovering the debt in
Mozambique.
Reconciliation to cash flow statement
At 31 March Cash flow Foreign At 31 March
2018 Exchange 2019
======================= ============ ========== ========== ============
US$000 US$000 US$000 US$000
======================= ============ ========== ========== ============
Non-current bank loan - 2,987 (137) 2,850
Current bank loan 50 786 (35) 801
======================= ============ ========== ========== ============
Overdrafts 4,185 (3,258) (20) 907
4,235 515 (192) 4,558
======================= ============ ========== ========== ============
At 31 March Cash flow Foreign At 31 March
2017 Exchange 2018
======================= ============ ========== ========== ============
US$000 US$000 US$000 US$000
======================= ============ ========== ========== ============
Non-current bank loan 734 (798) 64 -
Current bank loan 264 (237) 23 50
======================= ============ ========== ========== ============
Overdrafts 2,466 1,506 213 4,185
3,464 471 300 4,235
======================= ============ ========== ========== ============
20. Trade and other payables
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Trade payables 622 123
Other payables 294 50
Accrued liabilities 270 296
1,186 469
--------- ---------
'Trade payables', 'Other payables' and 'Accrued liabilities'
principally comprise amounts outstanding for trade purchases and
ongoing costs. No interest is charged on any balances.
The Directors consider that the carrying amount of financial
liabilities approximates their fair value.
21. FINANCIAL INSTRUMENTS
21.1. Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to shareholders. The capital structure of the Group
comprises its net debt (the borrowings disclosed in note 19 after
deducting cash and bank balances) and equity of the Group as shown
in the statement of financial position. The Group is not subject to
any externally imposed capital requirements.
The Board reviews the capital structure on a regular basis and
seeks to match new capital requirements of subsidiary companies to
new sources of external debt funding denominated in the currency of
operations of the relevant subsidiary. Where such additional
funding is not available, the Group funds the subsidiary company by
way of loans from the Company. The Group places funds which are not
required in the short term on deposit at the best interest rates it
is able to secure from its bankers.
Current interest rates on borrowings in Mozambique are very
high, with the prime lending rate at 19.5% at 31 March 2019 (2018:
24%). In light of this, the Group has been rationalising its
operations, with particular focus on disposing of surplus assets to
reduce external debt levels. The Group has restructured its loan
facilities in Mozambique to finance its Grain operations (note
19).
21.2. Categories of financial instruments
The following are the Group financial instruments as at the
year-end:
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Financial assets
Cash and bank balances 2,197 3,541
Other loans and receivables 681 1,059
--------- ---------
2,878 4,600
--------- ---------
Financial liabilities
Amortised cost 5,744 4,637
--------- ---------
5,744 4,637
(2,866) (37)
--------- ---------
21.3. Financial risk management objectives
The Group manages the risks arising from its operations, and
financial instruments at Executive operating and Board level. The
Board has overall responsibility for the establishment and
oversight of the Group's risk management framework and to ensure
that the Group has adequate policies, procedures and controls to
manage successfully the financial risks that the Group faces.
While the Group does not have a written policy relating to risk
management of the risks arising from any financial instruments
held, the close involvement of the senior executives in the day to
day operations of the Group ensures that risks are monitored and
controlled in an appropriate manner for the size and complexity of
the Group. Financial instruments are not traded, nor are
speculative positions taken. The Group has not entered into any
derivative or other hedging instruments.
The Group's key financial market risks arise from changes in
foreign exchange rates ('currency risk') and changes in interest
rates ('interest risk'). The Group is also exposed to credit risk
and liquidity risk. The principal risks that the Group faces as at
31 March 2019 with an impact on financial instruments are
summarised below.
21.4. Market Risk
The Group is exposed to currency risk and interest risk. These
are discussed further below.
21.4.1. Currency risk
Certain of the Group companies have functional currencies other
than US$ and the Group is therefore subject to fluctuations in
exchange rates in translation of their results and financial
position into US$ for the purposes of presenting consolidated
accounts. The Group does not hedge against this translation risk.
The Group's financial assets and liabilities by functional currency
of the relevant Group company are as follows:
Assets Liabilities
31 March 31 March 31 March 31 March
2019 2018 2019 2018
US$000 US$000 US$000 US$000
--------- --------- --------- ---------
United States Dollar
('US$') 1,972 3,120 141 175
Mozambique Metical ('MZN') 906 1,480 5,603 4,462
2,878 4,600 5,744 4,637
--------- --------- --------- ---------
The Group transacts with suppliers and/or customers in
currencies other than the functional currency of the relevant Group
Company (foreign currencies). The Group does not hedge against this
transactional risk. As at 31 March 2019 and 31 March 2018, the
Group's outstanding foreign currency denominated monetary items
were principally exposed to changes in the US$ / GBP and US$ / MZN
exchange rate.
The following tables detail the Group's exposure to a 5, 10 and
15 per cent increase in the US$ against GBP and separately to a 10,
20 and 30 per cent increase against the Metical. For a weakening of
the US$ against the relevant currency, there would be a comparable
impact on the profit and other equity, and the balances would be of
opposite sign. The sensitivity analysis includes only outstanding
foreign currency denominated items and excludes the translation of
foreign subsidiaries and operations into the Group's presentation
currency. The sensitivity also includes intra-group loans where the
loan is in a currency other than the functional currency of the
lender or borrower. A negative number indicates a decrease in
profit and other equity.
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
GBP Impact
Profit or loss
5% Increase in US$ (7) (7)
10% Increase in US$ (14) (13)
15% Increase in US$ (21) (20)
Other equity
5% Increase in US$ (7) (73)
10% Increase in US$ (14) (146)
15% Increase in US$ (21) (219)
MZN Impact
Profit or loss
10% Increase in US$ - 50
20% Increase in US$ - 100
30% Increase in US$ - 149
Other equity(1)
10% Increase in US$ (6,407) (6,434)
20% Increase in US$ (12,815) (12,868)
30% Increase in US$ (19,222) (19,302)
--------- ---------
This is mainly due to the exposure arising on the translation
(1) of US$ denominated intra-group loans provided to Metical
functional currency entities which are included as part
of the Group's net investment in the related entities.
21.4.2. Interest rate risk
The Group is exposed to interest rate risk because entities in
the Group hold cash balances and borrow funds at floating interest
rates. As at 31 March 2019 and 31 March 2018, the Group has no
interest bearing fixed rate instruments.
The Group maintains cash deposits at variable rates of interest
for a variety of short term periods, depending on cash
requirements. The Grain and Beef operations in Mozambique are also
financed through bank facilities. The rates obtained on cash
deposits are reviewed regularly and the best rate obtained in the
context of the Group's needs. The weighted average interest rate on
deposits was nil % (2018: 0.25%). The weighted average interest on
drawings under the overdraft facilities and bank loans was 20.14%
(2018: 26.05%). The Group does not hedge interest rate risk.
The following table details the Group's exposure to interest
rate changes, all of which affect profit and loss only with a
corresponding effect on accumulated losses. The sensitivity has
been prepared assuming the liability outstanding at the balance
sheet date was outstanding for the whole year. In all cases
presented, a negative number in profit and loss represents an
increase in finance expense/decrease in interest income. The
sensitivity as at 31 March 2019 and 31 March 2018 is presented
assuming interest rates on cash balances remain constant, with
increases of between 20bp and 1000bp on outstanding overdraft and
bank loans. This sensitivity to interest rate rises is deemed
appropriate because the Group interest bearing liabilities are
Metical based. Although the macroeconomic scenario in Mozambique is
now improving and interest rates are falling, they remain high with
prime rates of 19.5% at 31 March 2019 (2018: 24%). Any further
depreciation in the Metical could see this trend reverse.
31 March 31 March
2019(1) 2018
(1)
US$000 US$000
--------- ---------
+ 20 bp increase in interest rates (5) (1)
+ 50 bp increase in interest rates (12) (3)
+100 bp increase in interest rates (24) (7)
+200 bp increase in interest rates (47) (14)
+500 bp increase in interest rates (118) (35)
+800 bp increase in interest rates (189) (55)
+1000 bp increase in interest rates (236) (69)
--------- ---------
(1) The table above is prepared on the basis of an increase
in rates. A decrease in rates would have the opposite effect.
21.5. Credit risk
Credit risk arises from cash and cash equivalents, and deposits
with banks and financial institutions, as well as outstanding
receivables. The Group's principal deposits are held with various
banks with a high credit rating to diversify from a concentration
of credit risk. Receivables are regularly monitored and assessed
for recoverability. The impact of COVID-19 on the credit risk of
the Group has been considered in the Going Concern disclosures in
note 3.
The maximum exposure to credit risk is the carrying value of the
Group financial assets disclosed in note 21.2. Details of
provisions against financial assets are provided in note 18.
21.6. Liquidity risk
The Group policy throughout the year has been to ensure that it
has adequate liquidity by careful management of its working
capital. The operating executives continually monitor the Group's
actual and forecast cash flows and cash positions. They pay
particular attention to ongoing expenditure, both for operating
requirements and development activities, and matching of the
maturity profile of the Group's overdrafts to the processing and
sale of the Group's maize and beef products. The impact of COVID-19
on the liquidity risk of the Group has been considered in the Going
Concern disclosures in note 3.
At 31 March 2019 the Group held cash deposits of $ 2,197,000
(2018: $ 3,541,000). At 31 March 2019 the Group had overdraft and
bank loans facilities of approximately $ 5,063,000 (2018: $
5,452,000) of which $ 4,558,000 (2018: $ 4,224,000) were drawn. As
at the date of this report the Group has adequate liquidity to meet
its obligations as they fall due.
The following table details the Group's remaining contractual
maturity of its financial liabilities. The table is drawn up
utilising undiscounted cash flows and based on the earliest date on
which the Group could be required to settle its obligations. The
table includes both interest and principal cash flows.
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
1 month 2,159 4,612
2 to 3 months 134 25
4 to 12 months 601 -
1 to 2 years 1,634 -
3 to 5 years 1,216 -
--------- ---------
5,744 4,637
--------- ---------
22. Share capital
Allotted
and fully
Authorised paid
Number Number US$000
---------------- ---------------- -------
At 1 April 2017
Ordinary shares of 0.1p each 2,345,000,000 1,061,818,478 1,722
Issue of shares - 1,062,243,291 1,413
---------------- ---------------- -------
At 30 November 2017 2,345,000,000 2,124,061,769 3,135
Consolidation 1 new ordinary share
of 10p each for 100 ordinary shares
of 0.1p each (2,321,550,000) (2,102,821,151) -
---------------- ---------------- -------
At 31 March 2018 and 31 March
2019 23,450,000 21,240,618 3,135
At 31 March 2018 and 31 March
2019
Deferred shares of 0.1p each 155,000,000 155,000,000 238
Total share capital 178,450,000 176,240,618 3,373
---------------- ---------------- -------
The Company has one class of ordinary share which carries no
right to fixed income.
On 30 November 2017, the shareholders approved a resolution to
consolidate 100 existing ordinary shares of 0.1p each ("Existing
Ordinary Share") into one new ordinary share of 10p each ("New
Ordinary Share"). All references to the number of shares in issue
at 31 March 2019 and in the comparative year relate to New Ordinary
Shares.
The deferred shares carry no right to any dividend; no right to
receive notice, attend, speak or vote at any general meeting of the
Company; and on a return of capital on liquidation or otherwise,
the holders of the deferred shares are entitled to receive the
nominal amount paid up after the repayment of GBP1,000,000 per
ordinary share. The deferred shares may be converted into ordinary
shares by resolution of the Board.
23. Share based payments
23.1. Charge in the year
The Group recorded a charge within Operating expenses for share
based payments of $ nil (2018: $ 3,000) in respect of options
issued in previous years vesting during the year. No options were
issued during the year (2018: $nil).
23.2. Outstanding options and warrants
The Group, through the Company, has two unapproved share option
schemes which were established to provide equity incentives to the
Directors of, employees of and consultants to the Group. The
schemes' rules provide that the Board shall determine the exercise
price for each grant which shall be at least the average mid-market
closing price for the three days immediately prior to the grant of
the options. The minimum vesting year is generally one year. If
options remain unexercised after a year of 4 or 5 years from the
date of grant, or vesting, the options expire. Options are
forfeited if the employee leaves the Group before the options
vest.
In addition to share options issued under the unapproved share
option schemes, on 1 June 2015, the Group created a warrant
instrument (the 'Instrument') to provide suitable incentives to the
Group's employees, consultants and agents, and in particular those
based, or those spending considerable time, on site at the Group's
operations. Up to 1,000,000 warrants (the 'Warrants') to subscribe
for new Ordinary Shares in the Company (the 'Warrant Shares') maybe
issued pursuant to the Instrument. The exercise price of each
Warrant is GBP0.65 (the share price of the Company being
approximately 0.6p when the Instrument was created) and the
subscription year during which time the Warrants may be exercised
and Warrants Shares issued is the 5-year year from 1 June 2016 to 1
June 2021. Subject to various acceleration provisions, a holder of
Warrants is not entitled to sell more than 1,000 Warrant Shares in
any day nor more than 10,000 Warrant Shares (in aggregate) in any
calendar month, without Board consent. 50,000 Warrants are in
issue.
The following table provides a reconciliation of share options
and warrants outstanding during the year. The number of shares or
warrants and their respective exercise prices have been adjusted to
reflect the share consolidation (see note 22):
Year Weighted Year Weighted
ended average ended average
31 March exercise 31 March exercise
2019 price 2018 price
Number (p) Number (p)
At beginning of year 335,850 160 335,850 160
Granted in the year - - - -
Terminated in the year - - - -
Lapsed in the year (184,690) 83 - -
At end of year 151,160 263 335,850 160
---------- ---------- ---------- ----------
Exercisable at year end 151,160 263 325,850 160
---------- ---------- ---------- ----------
A transfer of $ 1,816,000 was made from the share based payments
reserve to the accumulated losses reserve in respect of the options
that lapsed during the year.
At 31 March 2019, the following options and warrants over
ordinary shares of 10p each have been granted and remain
unexercised:
Date of grant Total Exercisable Exercise
options Options price
P Expiry date
--------------- --------- ------------ --------- ----------------
29 July 2012 18,080 18,080 350p 29 July 2023
29 July 2012 18,080 18,080 550p 11 January 2020
01 March 2013 20,000 20,000 550p 30 April 2019
01 March 2013 20,000 20,000 275p 11 January 2020
15 March 2014 25,000 25,000 150p 15 March 2024
1 June 2015 50,000 50,000 65p 1 June 2021
--------- ------------
151,160 151,160
--------- ------------
24. Related party disclosures
Magister Investments Limited ("Magister"), holds 50.01% of the
ordinary share capital of the Company and is the ultimate
controlling party.
On 14 September 2017, shareholders approved the subscription by
Magister for 10,622,433 ordinary shares at a price of 31.26p per
share.
AS Groves, a director of the Company during the year ended 31
March 2018, is also a director of Liberian Cocoa Corporation
('LCC'), African Management Services Limited ('AMS'), Consolidated
Growth Holdings Limited (formerly Sable Mining Africa Limited,
'CGH'), Atlas African Industries Limited ('AAI') and East Africa
Packaging Limited ('EAPC'). The Group transacted with these
companies during the prior year to 31 March 2018. No such
transactions have occurred during the year ended 31 March 2019.
During the year ending 31 March 2018, AMS provided accounting,
office, treasury and administrative services to the Group for fees
of $ 289,500. As at 31 March 2018 the Group owed $ nil to AMS. On
19(th) October 2017, the Group disposed of its shareholding in AMS
to CGH for a nominal consideration.
As at 31 March 2018 the Group was owed $ nil from LCC.
During the year ended 31 March 2018 the Group and CGH incurred
certain expenses on each other's behalf, which were refunded in
full during the year. At 31 March 2018, the amount due to CGH was $
nil.
At 31 March 2018 the carrying value of amounts due from AAI was
$ nil.
The remuneration of the Directors, who are the key management
personnel of the Group, is set out in note 9.
25. Operating Leases Outstanding
At 31 March 2019 the Group had commitments for future minimum
lease payments under non-cancellable operating leases for land and
buildings, which fall due as follows:
31 March 31 March
2019 2018
US$000 US$000
--------- ---------
Within one year 51 78
In the second to fifth years inclusive 31 -
--------- ---------
82 78
--------- ---------
Operating lease rentals recognised as an expense in the
consolidated income statement were as follows:
Land and buildings 67 96
--- ---
26. Events subsequent to the balance sheet date
On 25 May 2019, Standard Bank renewed its overdraft facilities
for a further year (see note 19)
On 17 June 2019, an incident of theft occurred which was picked
up by local operational management, whereby a payment was made for
a fictitious purchase of grain amounting to US$ 5,000, of which US$
4,000 was subsequently recovered. This was not brought to the
Auditor's attention until the closing stages of the audit in
September 2019. The Company's shares were suspended from trading on
AIM on 1 October 2019 pending a requirement from the Auditors for
the Company to undertake further investigation (see note 27).
On 8 July 2019, Mozbife received the first tranche of a grant
award totalling MTN 52.45m (US$ 823,000) from the Fundo Catalitico
Para Inovacao E Demonstracao ("FCID"). The funds will be used to
establish 9 community association Cattle Sales Centres around
Manica province.
On 30 August 2019 Banco Unico made available to DECA an
additional overdraft facility of MTN 30m (US$ 471,000). The
facility bears interest at Prime. The facility is secured on a USD
cash deposit funded by Agriterra Limited. The facility was renewed
on 28 February 2020 for a further 6 months.
On 10 September 2019 Mozabanco made available to DECA a further
overdraft facility of MTN 60m (US$ 942,000). Interest is at prime
plus 0.5%. The facility is unsecured and is due for renewal on 9
June 2020.
The impact of COVID-19 is a non-adjusting event after the
reporting period. The impact of COVID-19 on the estimates and
judgements of the financial statements has been considered by the
Group and although there are inherent risks and uncertainties as
disclosed on page 3 in the Chair's statement, as at the date of
signing, COVID-19 has not had a material impact on the financial
statements. Further details in relation to Going Concern are
disclosed in note 3.
27. Fraud Investigation
Following the report to the Auditors of the incidence of theft
which occurred on 17 June 2019, the Auditors requested a detailed
investigation of the circumstances. An initial management review
brought to light a further incident concerning a fictitious
purchase of grain in January 2019. Consequently, the Audit
Committee commissioned an external team of internal auditors to
conduct a detailed review of the procurement cycle. This review
brought to light a further incidence in December 2018, together
with a potential theft of petty cash which could not be accounted
for. The gross loss to the Group of all incidences was US$ 21,000
with a net loss of US$ 9,000. The Auditors questioned the
independence of the internal audit team and therefore could not
conclude that the frauds did not have a material impact on the
financial statements without the need for a forensic audit. The
Company commissioned PKF Littlejohn LLP to perform the forensic
audit, the scope of which was agreed with the Auditors. The
forensic audit concluded that there was no evidence that further
incidences of fraud had occurred and that there was no material
impact on the financial statements of those incidences which had
come to light. The additional costs incurred by the Auditors in
respect of the frauds were approximately US$ 55,000 and by the
forensic auditor approximately US$ 155,000.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR DZGFFRGVGGZM
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